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UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


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BANK  ACT  OF  CALIFORNIA 


INCLUDING  1919  AMENDMENTS 


COMPILED  BY 

BLYTH,  WITTER  &  COMPANY 

GOVERNMENT,  MUNICIPAL  AND  CORPORATION  BONDS 
MERCHANTS  EXCHANGE 

San  Francisco 


NEW  YORK  LOS  ANGELES  SEATTLE 


J 


Copyright  1919 

BLYTH,  WITTER  &.  CO. 

GOVERNMENT,  MUNICIPAL  &.  CORPORATION 

BONDS 

Merchants  Exchange,  San  Francisco 

new  york  -  los  angeles  -  seattle 


-^ 


FOREWORD 


In  compiling  the  Bank  Act  of  California, 
including  amendments  of  1919,  we  have  tried 
to  prepare  a  volume  easy  of  reference  and  con- 
venient in  form. 

Legislative  provisions  referred  to  in  the  Act 
will  be  found  in  the  Appendix. 

Notes  based  substantially  on  an  analysis 
by  the  Superintendent  of  Banks  of  the  1919 
Amendments  are  generally  included  under 
those  sections  amended  wholly  or  in  part. 

For  valued  assistance  in  compiling  this  vol- 
ume we  are  indebted  to  various  officials  of 
the  State  Banking  Department  and  of  the  Cali- 
fornia Bankers  Association. 


BLYTH  WITTER  &  CO. 


August,   1919. 


TABLE  OF  CONTENTS 


ARTICLE  I. 

General    Provisions   Sections  1-    58,    inclusive 

ARTICLE  II. 

Savings    Banks    Sections      60-    70,    inclusive 

ARTICLE  III. 

Commercial    Banks    Sections      80-    85,    inclusive 

ARTICLE  IV. 

Trust    Companies    Sections      90-107,    inclusive 

ARTICLE  V. 

State    Banking    Department Sections    120-147,    inclusive 


APPENDIX              Text  of  certain  laws  referred  to  in  the  Bank  Act 
COMPLETE   CROSS    INDEX See   last   pages 


Bank  Act  of  California 

AN  ACT  TO  DEFINE  AND  REGULATE  THE  BUSINESS  OF 

BANKING 

The  People  of  the  State  of  California,  Represented  in  Senate  and  cAssembly 
'Do  Enact  as  Follows: 


ARTICLE  I. 
GENERAL  PROVISIONS. 

Section  1 .  This  act  shall  be  known  as  the  "bank  act,"  fj^*.'?''™^'^  "^^""^ 
and  shall  be  applicable  to  all  corporations  specified  in  the 
next  section  and  to  such  other  persons,  associations,  co- 
partnerships or  corporations  who  shall,  by  violating  any 
of  its  provisions,  become  subject  to  the  penalties  provided 
therein. 

Section    2.    The  word  "bank"  as  used  in  this  act  shall  "Bank"  defined. 
be  construed  to  mean  any  incorporated  banking  institu- 
tion which  shall  have  been  incorporated  to  conduct  the 
business  of  receiving  money  on  deposit,  or  transacting  a 
trust  business  as  herein  defined.     The  soliciting,  receiving  ^vhat  deemed  com- 

.  •  r  •.  •        1        1.  J  'i.  _    mercial  or  savings 

or  acceptmg  or  money  or  its  equivalent  on  deposit  as  a  -^^^^^^  business. 
regular  business  shall  be  deemed  to  be  doing  a  commer- 
cial or  savings  bank  business  whether  such  deposit  is  made 
subject  to  check  or  is  evidenced  by  a  certificate  of  de- 
posit, a  pass  book,  a  note,  a  receipt  or  other  writing; 
provided,  that  nothing  herein  shall  apply  to  or  include 
money  or  its  equivalent  left  in  escrow  or  left  with  an 
agent,  pending  investment  in  real  estate  or  securities  for 

or   on    account    of   his    principal.        It    shall    be    unlawful    for   Transacting  banking 

I    .         f  .       I .     .  ,        ,  business  otherwise 

any  corporation,  partnership,  nrm  or  individual  to  engage  than  by  means  of 

1  1.  t         ■  •.I'.i-         .1  L    banking  corporation- 

in  or  transact  a  banking  business  within  this  state  except  unlawful. 


§2-5  BLYTH.  WITTER  &   CO. 

by  means  of  a  corporation  duly  organized  for  such  pur- 
pose.    Banks  are  divided  into  the  following  classes: 

(a)  Savings  banks; 

(b)  Commercial  banks;  and 

(c)  Trust  companies. 

Method  of  orgranizing        Section    3.      Corporations  may  be   organized   by  any 

tanking  corporations.  _  i  i 

number  of  natural  persons,  not  less  in  any  case  than  three, 
under  the  laws  of  this  state  to  conduct,  as  provided  in  this 
act,  and  not  otherwise,  any  one  or  more  or  all  of  the 
businesses  mentioned  in  divisions  (a),  (b),  and  (c)  of 
section  tw^o,  of  this  act. 

"Savings  bank"       Section  4.      The  term   "savings  bank,"  when  used  in 

defined.  .         i     r  i  C 

this  act,  means  a  bank  organized  for  the  purpose  ot  ac- 
cumulating and  loaning  the  funds  of  its  members,  stock- 
holders, and  depositors,  and  which  may  loan  and  invest 
the  funds  thereof,  receive  deposits  of  money;  loan,  in- 
vest and  collect  the  same  with  interest;  and  may  repay 
depositors  with  or  without  interest,  and  having  power  to 
invest  said  funds  in  such  property,  securities  and  obliga- 
tions as  may  be  prescribed  by  this  act;  and  to  declare 
and  pay  dividends  on  its  general  deposits,  and  a  stipulated 
rate  of  interest  on  deposits  made  for  a  stated  period  or 
upon  special  terms. 

"Commercial  bank"       Section  5.     The  term  "commercial  bank,"  when  used 

defined. 

in  this  act,  means  any  bank  authorized  by  law  to  receive 
deposits  of  money,  deal  in  commercial  paper  or  to  make 
loans  thereon,  and  to  lend  money  on  real  or  personal 
property,  and  to  discount  bills,  notes  or  other  comn^ercisJ 
paper,  and  to  buy  and  sell  (and  advertise  for  pEirchase  or 
sale  such)  securities  (as  are  permissible  for  investment  by 
commercial  banks,)  gold  and  silver  bullion,  or  foreign 
Commercial  bank  coins   or  bills   of  exchange;    (provided,    any  commercial 

acting  as  agent  for  i  i     i     •  i         •  •  1  i.U  1 

insurance  company,  bank  located  and  doing  business  in  any  place  the  popula- 
tion of  which  does  not  exceed  five  thousand  persons,  as 
shown  by  the  last  preceding  federal  census,  or  any  subse- 
quent census  compiled  and  certified  under  any  law  of  this 

112] 


GENERAL  PROVISIONS §  5-7 

state,  may,  under  such  rules  and  regulations  as  may  be 
prescribed  by  the  superintendent  of  banks,  act  as  the 
agent  for  any  fire,  life,  or  other  insurance  company  auth- 
orized by  the  authorities  of  the  State  of  California  to  do 
business  in  this  state,  by  soliciting  and  selling  insurance 
and  collecting  premiums  on  policies  issued  by  such  com- 
pany; and  may  receive  for  services  so  rendered  such  fees 
or  commissions  as  may  be  agreed  upon  between  the  said 
bank  and  the  insurance  company  for  which  it  may  act  as 
agent;  provided,  how^ever,  that  no  such  bank  shall  in  any  Eank  not  to  assume 

.or  guarantee  pay- 

case  assume  or  guarantee  the  payment  of  any  premium  ment  of  premium, 
on    insurance    policies   issued    through    its    agency   by   its 
principal;  and  provided,  further,  that  said  bank  shall  not 
guarantee  the  truth  of  any  statement  made  by  an  assured 
in  filing  his  application  for  insurance). 

[Note  by  Publishers,  re  Section  5,  amended  1919:  The  phrases  and  pro- 
visos enclosed  in  brackets  interpolated  by  the  publishers  represent  new  matter 
added  by  amendment   in  1919. 

This  amendment  of  Section  5  is  designed  to  enlarge  the  definition  of  com- 
mercial banking  to  include  a  capacity  by  commercial  banks  in  cities  of  a  popu- 
lation not  greater  than  5.000  persons  to  act  as  the  agent  for  any  fire,  life,  or 
other  insurance  company  authorized  by  the  authorities  of  the  State  of  California 
to  do  business  in  this  State.  Such  agency  shall  be  regulated  by  rules  to  be 
prescribed  by  the  Superintendent  of  Banks.  The  section  is  amended  in  this  fash- 
ion to  permit  commercial  banks  in  the  State  system  to  compete  upon  an  equality 
with  National  Banks  in  the  same  locality.  The  amendment  is  of  identical 
phrasing  with  an  amendment  to  Section  13  of  the  Federal  Reserve  Act,  approved 
September  7,  1916.  Contingent  liabilities  involved  in  such  agency  are  removed 
absolutely.  For  regulations  governing  banks  desiring  to  establish  such  agency, 
see   state  Banking  Department's  Bulletin  No.    1   in  Appendix.] 

Section  6,      The  term   "trust  company,"  when  used  in  "Trust  company" 

,   .  .,.,..  ■,    defined. 

this  act,  means  any  corporation  which  is  incorporated 
under  the  laws  of  this  state  for  the  purpose  of  conducting 
the  business  of  acting  as  executor,  administrator,  guardian 
of  estates,  assignee,  receiver,  depositary  or  trustee  under 
appointment  of  any  court  or  by  authority  of  any  law  of 
this  state,  or  as  trustee  for  any  purpose  permitted  by  law. 

Section    7.       No    foreign    corporation    shall    transact    a  Foreign  Corporations. 

.,.  ...  ..  f  l.  .|      Prerequisites  to 

banking  business  m  this  state  without  nrst  complying  with  transacting  business 

111  •  r      1         1  r      1   •  1       •  '"  ^'^'^  ^*^**®- 

all  the  requirements  or  the  law^s  or  this  state  relative  to 
banks  as  defined  in  this  act,  and  without  having  assigned 
to  its  business  in  this  state  the  amount  of  paid-up  capital 
and  surplus  required  by  this  act  for  the  transaction  of 

[13] 


§7 BLYTH.  WITTER  &   CO. 

such  business  within  this  state.  No  foreign  banking  cor- 
poration shall  transact  business  in  this  state  until  such 
corporation  has  made  the  assignment  of  capital  required 
by   this  section   and   has   received   a   certificate   from   the 

Hereafter  not  to  re-  Superintendent  of  banks;  provided,  that  a  foreign  bank- 
(Exception)  mg  Corporation  shall  not  be  permitted  to  accept  deposits 
of  money  in  this  state  but  may  receive  a  certificate  from 
But  may  transact  the  superintendent  of  banks  to  transact  in  this  state  only 
'^  ^  busl^n'es^s.  the  business  of  buying  or  selling,  paying  or  collecting  bills 
of  exchange,  or  of  issuing  letters  of  credit  or  of  receiving 
money  for  transmission  or  transmitting  the  same  by  draft, 
check,  cable  or  otherwise,  or  of  making  loans;  and  pro- 
vided, further,  that  those  foreign  banking  corporations 
that  now^  have  power  to  do  a  banking  business  in  this 
state  and  which  now  receive  deposits  of  money  shall  be 
permitted  to  continue  to  accept  money  on  deposit.  Any 
foreign  banking  corporation  transacting  business  in  this 
state  shall  become  subject  to  the  supervision  of  the  state 
Subject  to  state  superintendent  of  banks.  Every  foreign  banking  corpora- 
tion, including  those  w^hich  were  on  January  second, 
nineteen  hundred  thirteen,  transacting  business  in  this 
state,  which  receives  any  deposits  or  transacts  any  other 
banking  business  or  transacts  its  business  in  such  a  man- 
ner as  might  lead  the  public  to  believe  that  its  business  is 
that  of  a  bank  shall  conduct  all  its  business  in  accordance 
with  the  statutes  governing  incorporated  banking  institu- 

Capitai  assigned  to  tions  Organized  under  the  laws  of  this  state.     The  capital 

business  in  this  State,       £  l     /•  •  i  i   •  •  •  i  • 

etc.,  to  be  kept  ot  any  such  foreign  banking  corporation  assigned  to  its 
business  in  this  state  and  all  funds  and  deposits  of  money 
received  by  any  such  corporation  in  this  state  or  for  or  in 
connection  with  its  business  in  this  state  and  all  accounts 
and  transactions  of  said  business  transacted  by  any  such 
foreign  corporation  in  this  state  shall  be  kept  separate 
and  apart  from  the  general  business,  assets  and  accounts 
of  such  foreign  corporation  in  the  same  manner  as  if  the 
business  of  such  foreign  corporation  conducted  within 
this  state  was  that  of  a  separate  and  independent  corpora- 

[14] 


GENERAL  PROVISIONS  §  7 


tion  organized  under  the  laws  of  this  state  for  the  pur- 
pose of  doing  a  banking  business  and  all  of  the  pro- 
visions of  this  act  affecting  investments,  loans  of  money, 
receiving  deposits  and  conducting  business  in  any  respect  Provisions  of  Act 

1  •  1  •       1      •  afFecting   investments, 

shall  be  deemed  to  apply  to  such  assigned  capital,  invest-  deposits,  etc.,  apply 

.  .,  II'  .ito  assigned  capital. 

ments,  loans,  deposits,  assets,  funds  and  business  in  the 
same  manner  as  if  such  assigned  capital,  investments, 
loans,  deposits,  assets,  funds  and  business  were  that  of 
such  separate  and  independent  corporation;  provided, 
that  loans  may  be  made  by  any  such  foreign  corporation  Loans  made  by  for- 

,  .  eig-n  corporations — 

based  on  its  entire  paid-up  capital  and  surplus  in  case  tueir  basis. 
such  foreign  corporation  shall  have  assigned  to  its  busi- 
ness in  this  state  a  paid-up  capital  and  surplus  as  abov^ 
provided  equal  to  twenty  per  centum  of  the  deposit  lia- 
bility of  such  branch  agency  or  office  to  residents  of  this 
state.  Such  funds  and  investments  or  loans  thereof  shall  be 
appropriated  solely  to  the  security  and  payment  of  such 
deposits,  and  shall  not  be  mingled  with  the  investments 
of  the  capital  stock  or  other  money  or  property  belong- 
ing to  such  corporation  or  be  liable  for  the  debts  or  obli- 
gations  thereof.      All   income   received    from   the  invest-  income  from  invest- 

...  .         ment  of  funds — how 

ment  of  such  funds  over  and  above  such  funds  as  may  be  applied. 

paid   to  depositors  as  interest  or  shall  be  carried  to  the 

surplus   fund,   as  provided  in  section   twency-one  of  this 

act,  shall  accrue  as  profits  to  the  corporation  and  may  be 

transferred  to  its  general  funds.    No  such  foreign  corpora-  Further  prerequisites 

.  .         I   .  .,    to  doing  business — 

tion  shall  transact  any  banking  business  in  this  state  until  Filing  appointment 

.  ,  .  ,  ,        of  Supt.  as  attorney, 

it  has  executed  and  hied  with  the  superintendent  or  banks  etc. 
a  written  instrument  appointing  such  superintendent  or 
his  successor  in  office,  its  true  and  lawful  attorney,  upon 
whom  all  process  issued  by  authority  of  or  under  any  law 
of  this  state  may  be  served,  with  the  same  effect  as  if 
such  corporation  was  formed  under  the  laws  of  this  state 
and  had  been  lawfully  served  with  process  therein.  Such 
service  upon  such  attorney  shall  be  deemed  personal 
service  on  such  corporation.  The  superintendent  of  banks 
shall  forthwith  forward  by  mail,  postage  prepaid,  a  copy 

[151 


BLYTH,  WITTER  &   CO. 


of  every  process  served  upon  him  under  the  provisions  of 
this  section,  addressed  to  the  manager  or  agent  of  such 
corporation,  at  its  principal  place  of  business  in  this  state. 
For  each  copy  of  process,  the  superintendent  of  banks 
shall  collect  the  sum  of  two  dollars,  which  shall  be  paid 
by  the  plaintiff  or  moving  party  at  the  time  of  the  serv- 
ice, to  be  recovered  by  him  as  a  part  of  his  taxable  costs 
Foreign  corporation  if  he  succeed  in  the  suit  or  proceeding.      No  foreign  cor- 

not  to  have  any  trust  .  i      11    i  •         •       ^i   •         i    ^      j.l_  1. 

company  powers,  or  poratioH  shall  have  or  exercise  in  this  state  the  power  to 

powers  specified  in  •  i  ••  r    .  .  -t*  tL 

Sec.  6,  except  in  this  rcceive  deposits  ot  trust  moneys,  securities  or  other  per- 

State  may  exercise  1  .       f  !.•„_£ 

powers  permitted  to  sonal  property  from  any  person  or  corporation  or  any  or 
°by'sec!°90,°and'act  the  powers  specified  in  section  six  of  this  act,  nor  have  or 
asexecut^oj^ortm^s-  j^^jj^t^in  an  office  in  this  state  for  the  transaction  of,  or 
transact,  directly  or  indirectly,  any  such  or  similar  busi- 
ness, except  that  a  trust  company  incorporated  in  another 
state  may  have  or  exercise  in  this  state  such  powers  as  are 
permitted  to  foreign  corporations  by  the  provisions  of 
section  ninety  of  this  act  and  may  be  appointed  and  may 
accept  appointment  and  may  act  in  this  state  as  execu- 
tor of  or  trustee  under  the  last  will  and  testament  of  any 
deceased  person,  upon  giving  the  bond  required  in  such 
cases  of  individuals  unless  waived  by  the  last  will  and 
testament  making  such  appointment  and  by  taking  and 
subscribing  an  oath  for  faithful  performance  of  such 
trust  by  the  president,  vice  president,  secretary,  manager 
or  trust  officer  of  said  corporation;  provided,  that  such 
superintendent  of  banks,  for  the  time  being,  shall  be 
attorney  of  such  foreign  corporation  qualifying  or  act- 
ing in  this  state  as  such  executor  or  trustee,  upon  whom 
process  against  such  foreign  corporation  may  be  served 
,'  ;  in  any  action  or  legal  proceeding  against  such  executor 
or  trustee  affecting  or  relating  to  the  estate  or  prop- 
erty represented  or  held  by  such  executor  or  trustee,  or 
any     act     or     default     of     such     foreign     corporation     in 


Foreign  corporation  reference    to    such    estate    or    property,    and    it    shall    be 

30  acting  to  nle  copy  *^        *  " 

and  appoin'tmlnfo'f'  the   duty    of   such    foreign    corporation    so    qualifying    or 
supt.  as  attorney.  ^^^^^^    j^    f^jg    j^    the    office    of    said    superintendent    of 

[16] 


GENERAL  PROVISIONS  §  7 


banks  a  copy  of  its  articles  of  incorporation,  or  of  the 
statute  chartering  such  corporation,  certified  by  its 
secretary  under  its  corporate  seal,  together  with  the 
post-office  address  of  its  home  office,  and  a  duly  executed 
appointment  of  said  superintendent  of  banks  as  its  at- 
torney to  accept  service  of  process  as  above  provided,  and 
said  superintendent  of  banks,  when  any  such  process  is 
served  upon  him,  shall  at  once  mail  the  papers  so  served 
to   the  home  office   of  such   corporation;   and   provided.  No  foreign  corpora- 

.  .  I    •    I  1_  ^'"^   having   in    State 

further,   that  no  foreign  corporation  which  may  have  or  powers  permitted  by 
exercise  in  this  state  such  powers  as  are  permitted  to  tor-  maintain  branch 

.  I  .    .  /.  .  .  £   office  or  solicit  busi- 

eign  corporations  by  the  provisions  or  section  ninety  or  ness  as  executor  or 
this  act  or  having  authority  to  act  as  executor  of  or  trustee 
under  the  last  will  and  testament  of  any  deceased  person 
shall  establish  or  maintain,  directly  or  indirectly,  any 
branch  office  or  agency  in  this  state,  or  shall  in  any  way 
solicit,  directly  or  indirectly,  any  business  as  executor  or  penalty  for  violation. 
trustee  therein,  and  that  for  any  violation  of  this  proviso, 
the  court  having  jurisdiction  of  such  executor  or  trustee 
in  said  proceeding  may  in  its  discretion,  revoke  the  right 
of  such  foreign  corporation  thereafter  to  act  as  executor 
or  trustee  therein;  provided,  that  nothing  in  this  act  shall 
limit  or  affect  the  right  of  any  foreign  corporation  doing 
a  banking  business  in  this  state,  to  lend  within  this  state, 
moneys  of  such  corporation  which  do  not  form  a  part  of 
the  moneys,  deposits  or  assets  of  such  corporation  as- 
signed or  belonging  to  its  business  in  this  state. 

This  section  shall  not  be  construed  to  prohibit  foreign  Foreign  banking 

bi.  .  1-11  t  -t-  ai  •       corporations  not  main- 

anking  corporations,  which  do  not  maintain  an  orhce  in  taining  office  here 

this  state   for  the  transaction   of  business,    from  making  making  mortgage"" 
loans  in  this  state  secured  by  mortgages  on  real  property,    °*"^' 
nor  from  accepting  assignments  of  mortgages  covering 
real  property  situated  in  this  state,  nor  from  making  loans 
through  correspondents  which  are  engaged   in   the  busi- 
ness of  banking  in  this  state  under  the  laws  of  this  state. 

[Note  by  Publishers,   re   Section  7,   amended  1917: 

This    section,    as    amended,    deals    with    the    conditions    under    which    foreign 
banks  may  engage  in  business  in  this  State.     Under  the  law  as  it  stood   prior  to 

[17] 


§8 


BLYTH,  WITTER  &   CO. 


1917,  forei&n  banks,  if  permitted  to  come  into  the  State  at  all,  came  with 
every  privilege  extended  to  domestic  corporations.  Experience  in  other  States 
and  in  this  State  led  to  the  conclusion  that  the  proper  and  most  effective  means 
of  extending:  the  activities  and  the  service  to  be  rendered  by  foreign  banks  that 
might  hereafter  come  into  California,  is  to  make  it  easier  for  them  to  come  in. 
It  seems  paradoxical  to  say  that  it  is  easier  for  foreign  banks  to  come  in  when 
we  deprive  them  of  one  of  the  privileges  that  they  would  have  if  they  had  come 
in  under  conditions  existing  prior  to  the  above  amendment.  The  fact  remains, 
however,  that  no  foreign  bank  which  desires  to  come  here  to  promote  foreign 
trade  and  to  widen  its  own  activities,  comes  because  of  the  inducement  that  it 
may  be  permitted  to  receive  deposits  in  this  State.  We  have  in  this  State  six 
foreign  banks;  three  of  these  are  receiving  deposits  and  three  are  not  receiving 
deposits.  Those  that  are  not  receiving  deposits  have  imposed  upon  themselves 
the  condition  that  they  shall  not  receive  deposits  in  this  State.  The  amendment 
therefore  does  not  deprive  any  bank  which  had  been  receiving  deposits  in  this 
State  prior  to  the  amendment  from  continuing  to  do  so,  but  banks  before  or  after 
the  amendment  not  receiving  deposits  in  this  State  are  not  permitted  to  receive 
deposits.  The  constitution  of  this  State  provides  that  no  foreign  corporation  shall 
come  into  this  State  and  enjoy  the  privilege  of  doing  business  in  this  State  on 
more  favorable  terms  than  may  be  extended  to  a  domestic  corporation.  While 
the  power  to  receive  deposits  is  not  in  one  aspect  more  favorable  terms  for  a 
foreign  corporation,  it  is  in  reality  such  because  of  the  fact  that  the  same  element 
of  security  and  of  protection  and  of  supervision  that  the  people  of  this  State  have 
when  they  deposit  their  moneys  in  domestic  institutions  can  not  be  extended  to 
those  deposits  when  they  are  placed  in  foreign  institutions.  Fortunately,  the 
foreign  institutions  that  are  now  receiving  deposits  in  this  State  are  of  the 
highest  class,  but  there  could  be  no  such  well  established  confidence  with  refer- 
ence to  all  foreign  banks  which  might  desire  to  come  into  this  State;  when  a 
foreign  bank,  therefore,  desires  to  enter  California  and  insists  upon  the  privilege 
of  receiving  deposits,  it  is  necessary  to  refuse  such  bank  a  license.  Under 
authority  of  the  amendment  it  will  be  easier  for  foreign  banks  to  enter  because 
the  doors  of  the  State  can  be  thrown  open  and  we  can  welcome  any  foreign  bank 
to  come  here  and  offer  its  service  in  assisting  in  the  extension  of  foreign  trade, 
the  only  purpose  for  which  a  foreign  bank  should  be  permitted  to  do  business  in 
this    State. 

FOREIGN  TRUST  COMPANIES. 

And  along  the  same  line  of  our  desire  to  extend  to  foreign  banks  facility  of 
coming  in  here,  we  have  taken  out  another  important  limitation  that  was  in  Sec- 
tion 7,  in  reference  to  foreign  trust  companies.  Foreign  trust  companies  were  not 
permitted  to  come  in  here  and  undertake  the  execution  of  any  trust  unless  the 
laws  of  their  State,  in  which  their  principal  place  of  business  is  located,  also 
permitted  trust  companies  of  California  to   perform   a  like  service  in  their   State. 

By  the  above  amendment,  that  limitation  was  taken  out  and  foreign  trust 
companies  are  permitted  to  come  in  for  any  purpose,  excepting  for  certain  limita- 
tions which,  if  removed,  would  interfere  with  the  protections  that  are  thrown 
around  our  own  trust  companies.] 

Requirements  im-        Section  8.     Every  corporation,  at  the  time  it  applies  for 

posed  upon  every  .  i  i   •  i         • 

corporation  applying  a  certihcate  ot  authority  to  do  a  banking  business,  must 
file  with  the  superintendent  of  banks  a  certified  copy  of 


authority  to  do  a 
banking  business. 


its  articles  of  incorporation,  or  of  the  statute  chartering 
such  corporation,  a  certified  copy  of  its  by-laws,  and 
also  a  certified  copy  of  all  instruments  amending  or  alter- 
ing such  articles  of  incorporation  or  charter  or  by-lav/s. 
Thereafter  a  certified  copy  of  each  amendment  or  certifi- 
cate designed  to  increase  or  decrease  the  capital  stock,  to 
change  the  number  of  directors,  to  amend  the  articles  of 
incorporation,  to  change  the  principal  place  of  business, 
or  the  name  of  such  corporation,  or  to  effect  any  other 
organic  change  shall  likewise  be  so  filed  before  such  in- 


[18] 


GENERAL  PROVISIONS §  8-9 

strument  takes  effect.  Each  certification  required  by  the 
provisions  of  this  section  other  than  that  of  by-laws  must 
be  by  the  secretary  of  state. 

[Note  by  Publishers,  re  Section   8,   amended  1919: 

This  section  remedies  a  conflict  v/hich  existed  between  this  section  and  Sec- 
tion 290a  of  the  Civil  Code.  The  last-named  section  was  amended  in  1917  so  as 
to  eliminate  the  requirement  of  the  affidavit  of  the  organizers  of  a  banking  cor- 
poration with  reference  to  the  paid-in  capital  thereof,  but  Section  8  continued 
to  demand  this  requirement;  and  the  elimination  of  this  feature  of  Section  8 
is  the  only  purpose  of  the   amendment. 

See  Appendix  for  extract  from  Section  290a,   Civil  Code.] 

Section  9.  No  bank  in  this  state,  or  any  officer  or  Branch  Banks. 
director  thereof,  shall  hereafter  open  or  keep  an  office  prerequisites  for 
other  than  its  principal  place  of  business,  without  first 
having  obtained  the  written  approval  of  the  superintend- 
ent of  banks  to  the  opening  of  such  branch  office,  which 
written  approval  may  be  given  or  withheld  in  his  discre- 
tion, and  shall  not  be  given  by  him  until  he  has  ascer- 
tained to  his  satisfaction  that  the  public  convenience  and 
advantage  will  be  promoted  by  the  opening  of  such 
branch  office;  provided,  that  no  bank  or  any  officer  or  capital  required- 
director  thereof,  shall  open  or  maintain  any  such  branch 
office  unless  the  capital  of  such  bank,  actually  paid  in, 
in  cash,  shall  exceed  the  amount  required  by  this  act  by 
the  sum  of  twenty-five  thousand  dollars  for  each  branch 
office  opened  and  maintained  in  the  place  where  its  prin- 
cipal business  is  transacted ;  and  provided,  that  for  each  For  each  branch 

t  y  rr  1  ••11  IIL  other  than  trust 

branch  office  opened  or  maintained  by  any  bank,  other  company  branch  out- 

,  ,,  .  Ill-  i^il^       si'^s  principal  place 

than  a  bank  transacting  only  the  business  described  in  of  business. 
section  six  of  this  act,  in  any  place  in  this  state  other  than 
the  place  where  the  principal  business  of  such  bank  is 
transacted,  the  capital  of  such  bank,  actually  paid  in,  in 
cash,  shall  exceed  the  amount  required  by  this  act  in  the 
sum  required  by  this  act  for  every  bank  hereafter  organ- 
ized in  the  place  where  each  branch  office  is  to  be  opened 
or  maintained,  exclusive  of  the  capital  required  for  a 
trust    department;    and,     provided    also,     that    for    each  For  branch  opened 

.  .         ,    ,  .by  trust  company 

branch  office  opened  or  maintained  by  any  corporation  or  mortgage-insur- 
which  has  power  to  transact  only  such  business  as  is  de- 
scribed in  section  six  of  this  act  or  in  section  four  hundred 

[191 


ance  company,  etc. 


§  9  BLYTH,  WITTER  &   CO. 

fifty-three  x  of  the  Civil  Code,  in  any  place  in  this  state 
other  than  the  place  where  the  principal  business  of  such 
corporation  is  transacted,  the  capital  of  such  corporation, 
actually  paid  in,  in  cash,  shall  exceed  the  amount  re- 
quired by  this  act  in  the  sum  of  twenty-five  thousand  dol- 
lars; and  provided,  further,  that  no  branch  office  may  be 
discontinued  w^ithout  the  previous  w^ritten  approval  of 
the  superintendent  of  banks. 

Certificate  required        Every  bank,  before  it  opens  a  branch  office,  shall  ob- 

for  opening  branch. 

tain  the  certificate  of  authority  of  the  superintendent  of 

banks  for  the  opening  of  each  of  said  branch  offices.    The 

applicant  shall  pay  for  such  certificate  a  fee  of  fifty  dol- 

Bank  may  arrange  Jars;  provided,  however,  that,  in  order  to  encourage  sav- 
ior collection  of  sav-  '  ^ 

ings  in  schools,  jng  among  the  children  of  the  schools  of  this  state,  a  bank 
may,  with  the  written  consent  of  and  under  regulations 
approved  by  the  superintendent  of  banks  and,  in  case  of 
public  schools,  by  the  board  of  education  or  board  of 
school  trustees  of  the  city  or  district  in  which  the  school 
is  situated,  arrange  for  the  collection  of  savings  from  the 
school  children  by  the  principal  or  teachers  of  such 
schools  or  by  collectors.  The  principal,  teacher  or  per- 
son authorized  by  the  bank  to  make  collections  from  the 
school  children  shall  be  deemed  to  be  the  agent  of  the 
bank  and  the  bank  shall  be  liable  to  the  pupil  for  all  de- 
posits made  with  such  principal,  teacher  or  other  person, 
the  same  as  if  the  deposits  were  made  by  the  pupil 
Penalty  for  violation  directly  w^ith  the  bank.    Every  bank  and  every  such  officer 

of  section.  •    i       .  i  •    •  r      i   •  •  in 

or  director  violatmg  the  provisions  or  this  section  shall 
forfeit  to  the  people  of  the  state  the  sum  of  one  hundred 
dollars  for  every  day  during  which  any  branch  office 
hereafter  opened  shall  be  maintained  without  such  writ- 
ten approval. 

[Note  by  Publishers,  re  Section  9,  amended  1917: 

BRANCH  BANKS:  Under  the  law  as  it  stood  previous  to  this  amendment  of 
1917,  a  branch  office  could  be  opened  with  a  capital  of  but  $25,000  in  excess  of 
the  amount  otherwise  required  for  the  conduct  of  the  business  of  the  bank  in  the 
locality  where  the  principal  business  of  the  bank  was  located.  The  amendment 
of  1917  requires  that  where  a  bank  opens  a  branch  office  in  any  place  in  this 
State  other  than  the  place  where  the  principal  business  of  such  bank  is  transacted, 
the  capital  of  such  bank,  actually  paid  in,  in  cash,  shall  exceed  the  amount  re- 
quired by  the  act  in  the  sum  required  by  the   act  for  every  bank  organized  after 

[201 


BLYTH,  WITTER  &   CO.  §10-11 


said  amendment  in  the  place  where  each  branch  ofl&ce  is  to  be  opened.  For 
instance,  a  bank  not  having  a  trust  department  and  having  its  principal  place  of 
business  in  San  Francisco,  is  required  to  have  $300,000  capital.  Such  an  institu- 
tion under  authority  of  the  law  without  this  amendment  might  have  opened  a 
branch  office  in  Los  Angeles  with  an  additional  $25,000,  while  a  new  bank  in 
Los  Angeles  would  have  to  have  $300,000  capital,  the  same  as  in  San  Francisco. 
This  amendment  requires  that  the  San  Francisco  bank  must  have  a  capital  of  not 
less  than  $600,000,   to  open  a  branch  office  in  Los   Angeles. 

An  additional  change  made  by  this  amendment,  is  that  no  branch,  once  it  is 
opened,  shall  be  closed  without  the  approval  of  the  Superintendent  of  Banks, 
The  purpose  of  that  is,  of  course,  to  prevent  a  bank  from  opening  a  branch  in 
some  place  to  control  business  and  then  subsequently  closing  the  branch  and  trans- 
ferring the  business  of  its  depositors  to  seme  other  place,  leaving  the  community 
without  any  banking  facilities.] 

Section  1  0.     No  person  shall  be  eligible  for  election  as  Directors. 
director  of  a  bank  having  a  capital  stock  unless  he  is  a 
stockholder  of  the  bank,  owning,  in  his  own  right,  shares 
thereof  of  the  par  value  of  at  least  five  hundred  dollars; 
and  every  person  elected  to  be  director  who,  after  such  Director  after  eiec- 

,.  Ill  II  -i-  •    1  t   *^°"  ceasing  to  own, 

election,  shall  cease  to  be  the  owner  m  his  own  right  or  or  pledging,  quaiify- 

the  amount  of  such  stock  aforesaid,  or  shall  hypothecate  supt.,  etc. 

or  in  any  way  pledge  such  stock  as  security  for  any  loan 

or  debt   shall   immediately   notify   the   superintendent   of 

banks  in  w^riting  of  such  sale  or  hypothecation  and  such 

director  may  be  removed  from  the  office  of  director  by 

the  superintendent  of  banks;  provided,  however,  that  any  Executor  or  adminis- 

...  ,       .     .  .       trator  when  eligible 

executor  or  executrix,  administrator  or  administratrix  as  director. 
holding  shares  of  a  bank  of  the  par  value  of  five  hundred 
dollars,  in  his  or  her  representative  capacity  shall  be 
eligible  for  election  as  a  director  thereof.  If  a  bank  be 
organized  without  capital  stock,  no  person  shall  be  eli- 
gible as  a  director  thereof  unless  be  is  both  a  member  and 
a  depositor  of  such  bank. 

Section  1  1 .   The  board  of  directors  of  a  bank  organized  Directors'  Meetings 

_  to  be  held  at  least 

under  the  laws  of  this  state  must  hold  a  meeting  in  its  once  a  month. 

banking    premises    at    least    once    a   month.       Each    such 

director,  when  appointed  or  elected,   shall  take  an  oath  oath  of  directors. 

that  he  will,  as  far  as  the  duty  devolves  on  him,  diligently 

and  honestly  administer  the  affairs  of  such  bank,  and  will 

not  knowingly  violate  or  v/illfully  permit  to  be  violated  any 

of  the  provisions  of  law  applicable  to  such  bank,  and  that 

he  is  the  owner  in  good  faith  and  in  his  own  right  of  shares 

of  stock  of  the  par  value  required  by  section  ten  of  this  act, 

1211 


H-12 BLYTH,  WITTER  &   CO. 

subscribed  by  him  or  standing  in  his  name  on  the  books 
of  the  bank,  and  that  the  same  to  an  amount  equal  to  the 
par  value  of  at  least  five  hundred  dollars,  are  not  hypoth- 
ecated or  in  any  way  pledged  as  security  for  any  loan 
or  debt.  Such  oath  shall  be  subscribed  by  the  director 
making  it,  certified  by  the  officer  before  whom  it  is  taken, 
and  immediately  transmitted  to  the  superintendent  of 
banks  and  filed  and  preserved  in  his  office;  provided,  the 
Oath  required  of  managers  or  agents  residing  in   this  state,    of  a   foreign 

Resident  Managers  "        .  .  i  i  •  i         •  •         i   • 

or  Agents,  corporation  transacting  any  banking  business  m  this  state, 
shall  take  an  oath  that  they  will,  as  far  as  the  duty  de- 
volves on  them,  diligently  and  honestly  administer  the 
affairs  of  such  bank,  and  will  not  knowingly  violate  or 
wilfully  permit  to  be  violated  any  of  the  provisions  of 
law  applicable  to  such  bank.  Such  oath  shall  be  sub- 
scribed by  the  managers  or  agents  taking  it,  certified  by 
the  officer  before  whom  it  is  taken,  and  immediately 
transmitted  to  the  superintendent  of  banks  and  filed  and 
.  preserved  in  his  office. 

Person,  firm,  cor-       Section  I  2.     No  person,  firm,  company,  copartnership 

poration,  etc.,  not 

subject  to  super-  or  Corporation,  either  domestic  or  foreign,  not  subject  to 

vision  of  Supt.,  and  •    •  r      i  •  i  r    i  i  i 

unauthorized  under  the  Supervision  ot  the  superintendent  of  banks,  and  not 

Act — shall  not  ad- 
vertise acceptance  of  required,  by  the  provisions  of  this  act,  to  report  to  him, 

money  or  savings,  or  ...     ,  .  ._  i  i   • 

do  acts  inducing  be-  and  which  has  not  received  a  certincate  to  do  a  banking 

lief  that  place  or,.  ^  ,  .  ,  riiiiii 

office  is  that  of  bank  busmess  trom  the  superintendent  ot  banks,  shall  adver- 

or  trust  company.     .  i  i  •      •  •     • 

tise  that  he  or  it  is  receiving  or  accepting  money  or  sav- 
ings, and  issuing  notes  or  certificates  of  deposit  therefor, 
or  shall  make  use  of  any  office  sign,  at  the  place  where 
such  business  is  transacted,  having  thereon  any  artificial 
or  corporate  name,  or  other  words  indicating  that  such 
place  or  office  is  the  place  or  office  of  a  bank  or  trust 
company,  that  deposits  are  received  there  or  payments 
Shall  not  use  station-  made  On  check,   or  any  other  form  of  banking  business 

ery,  name  or  words    .  .      i  i      ii  i  r 

indicating  place  or  transacted,   nor  shall   any  such   person   or  persons,    hrm, 

office  is  that  of  bank  .  i   •  i.*  1  •.•  £ 

or  trust  company,  Company,  Copartnership  or  corporation,  domestic  or  ror- 

^  °"  eign,  make  use  of  or  circulate  any  letterheads,  billheads, 

blank  notes,  blank  receipts,  certificates  or  circulars,  or  any 

[221 


GENERAL  PROVISIONS §_[2 

written  or  printed,  or  partly  written  and  partly  printed, 
paper,  whatever,  having  thereon  any  artificial  or  cor- 
porate name  or  other  word  or  words  indicating  that 
such  business  is  the  business  of  a  bank,  savings  bank  or 
trust  company;  nor  shall  any  such  person,  firm,  company, 
copartnership  or  corporation,  or  any  agent  of  a  foreign 
corporation  not  having  an  established  place  of  business 
in  this  state,  solicit  or  receive  deposits  or  transact  business 
in  the  way  or  manner  of  a  bank,  savings  bank  or  trust 
company,  or  in  such  a  way  or  manner  as  to  lead  the  pub- 
lic to  believe  that  its  business  is  that  of  a  bank,  savings  bank 
or  trust  company.  Nor  shall  any  person,  firm,  company, 
copartnership  or  corporation,  domestic  or  foreign,  not 
subject  to  the  supervision  of  the  superintendent  of  banks, 
and  not  required  by  the  provisions  of  this  act  to  report  to 
him,  and  which  has  not  received  from  the  superintendent 
of  banks  a  certificate  to  do  a  banking  business,  hereafter 
transact  business  under  any  name  or  title  which  contains 
the  word  "bank,"  or  "banker,"  or  "banking,"  or  "sav- 
ings bank,"  or  "savings"  or  "trust"  or  "trustee"  or  "trust 
company";  provided,  that  this  section  shall  not  apply  to  section  shall  not  ap- 

I  r  1       -1   1-  11  •      •  ply  to  name  of  exist- 

the  corporate  name  of  any  building  and  loan  association  ing  Bidg.  &  Loan 
now  or  heretofore  doing  business  in  this  state;  and  pro- 
vided,   further,    that   any   such   association    having   in   its  Nature  of  business 

,  I  1        •       1-  •  1  °^  Bldg.   &  Loan 

corporate  name  words  not  clearly  indicating  the  nature  Assn.  must  be  shown, 

r  •        1  •  1       11  11      •  1  11  11  .         by    its    title    or 

or  its  business  shall,  on  all  signs,  letterheads  and  advertis-  advertising. 
ing  matter,  state  "This  is  a  building  and  loan  association" 
or  words  to  that  effect;  and  provided,  further,  that  any 
building  and  loan  association  may  borrow  money,  issue 
investment  certificates  or  evidences  of  indebtedness,  stat- 
ing the  rate  of  interest  and  terms  and  conditions  of  repay- 
ment, and  do  such  other  business  as  may  be  authorized 
by  the  laws  of  the  state  relating  to  building  and  loan  as- 
sociations; and  provided,    further,    that  no  such  associa-  No  Bidg.  &  Loan 

1     11       1         •  1     1  1   •      If  1  11-  ■'^^^"'  ^^^^^  ^°^^  ^*^®^^ 

tion  shall  advertise  or  hold  itselr  out  to  the  public  as  a  out  as  savings  bank. 

savings  bank.      Any  person,    firm,    company,    copartner- 
ship  or  corporation,    domestic   or   foreign,    violating  any 

[231 


§  I  2- 12a  BLYTH.  WITTER  &   CO. 


provision  of  this  section  shall  forfeit  to  the  state  one 
hundred  dollars  a  day  for  every  day  or  part  thereof 
during  which  such  violation  continues.  Upon  action 
brought  by  the  superintendent  of  banks  the  court  may 
issue  an  injunction  restraining  any  such  person,  firm,  com- 
pany, copartnership  or  corporation  from  further  using 
such  words  in  violation  of  the  provisions  of  this  section 
or  from  further  transacting  business  in  such  a  way  or 
manner  as  to  lead  the  public  to  believe  that  its  business 
is  that  of  a  bank,  savings  bank  or  trust  company  during 
the  pendency  of  such  action  and  for  all  time  and  may 
make  such  other  order  or  decree  as  equity  and  justice 
may  require. 

Every  person,  firm,        Section    1 2a.      Every   person,    firm,    company,    copart- 

corporation,  etc.,   do-  _  •  r  •  J  •    • 

mestic  or  foreign—  nership  or  corporation,   domestic  or  foreign,   advertising 
that  he  or  it  is  receiving  or  accepting  money  or  savings. 
Advertising  transac-  and   issuing  notes   or  certificates   of  deposit  therefor,    or 
savings  bank°fr  advertising  that  he  or  it  is  transacting  the  business  of  a 
^'^eLrin  any^form^  bank,   savings  bank  or  trust  company,   or  making  use  of 
^^^'  any  office  sign  at  the  place  where  such  business  is  trans- 
Must  have  proper  actcd,  having  thereon  any  artificial  or  corporate  name,  or 

capital  paid  in  and         ,  i-i-'i  ii  cC*       j.1. 

set  aside  and  have  other  words  indicating  that  such  place  or  omce  is  the 
from  supt.  place  or  office  of  a  bank,  or  trust  company,  or  that  de- 
posits are  received  there  or  payments  made  on  check,  or 
that  interest  is  paid  on  deposits,  or  that  certificates  of 
deposit,  either  with  or  without  interest  are  being  issued, 
or  that  any  other  form  of  banking  business  is  transacted, 
and  every  person,  firm,  company,  copartnership  or  cor- 
poration, domestic  or  foreign,  making  use  of  or  circulat- 
ing any  letterheads,  billheads,  blank  notes,  blank  receipts, 
certificates  or  circulars,  or  any  written  or  printed,  or 
partly  written  and  partly  printed,  paper,  whatever,  hav- 
ing thereon  any  artificial  or  corporate  name,  or  adver- 
tising that  such  business  is  the  business  of  a  bank,  savings 
bank  or  trust  company,  must  have  the  proper  capital 
Penalty,  stock  paid  in  and  set  aside  for  the  purpose  of  transacting 
such  business,  and  must  have  received  from  the  superin- 

[241 


GENERAL  PROVISIONS  §  12< 


tendent  of  banks,  as  provided  for  in  this  act,  a  certificate 
to  do  a  banking  business.  Any  person,  firm,  company,  co- 
partnership or  corporation,  domestic  or  foreign,  violating 
any  provision  of  this  section  shall  forfeit  to  the  state  one 
hundred  dollars  a  day  for  every  day  or  part  thereof  dur- 
ing which  such  violation  continues.  Upon  action  brought 
by  the  superintendent  of  banks  the  court  may  issue  an 
injunction  restraining  any  such  person,  firm,  company, 
copartnership  or  corporation  from  further  violating  any 
provision  of  this  section,  and  may  make  such  further 
order  or  decree  as  equity  and  justice  may  require.     Every  Every  person,  firm, 

,   .  .  corporation,  etc., 

person,     firm,     company,     copartnership     or    corporation  transacting  any  busi- 

,  ,   .  .  C     L       L       •  '^'^^^  defined  in  Sec. 

doing  any  or  the  things  or  transacting  any  or  the  business  must  do  so  under 

,_,.,.  .  11-  Bank  Act. 

defined  in  this  section,  must  transact  such  business  ac- 
cording to  the  provisions  of  the  bank  act,  and  the  super- 
intendent of  banks  or  his  deputy  or  examiners  shall  have 
authority  to  examine  the  accounts,  books  and  papers  of 
every  such  person,  firm,  company,  copartnership  or  cor- 
poration, domestic  or  foreign,  in  order  to  ascertain 
whether  such  person,  firm,  company,  copartnership  or 
corporation  has  violated  or  is  violating  any  provisions  of 
this  section :  provided,  that  this  section  shall  not  apply  to  Section  not  applicable 

_       _  _       .  to  corporate  name  of 

the  corporate  name  of  any  building  and  loan  association  existing  Bidg.  & 

.  1         .  .         I   .  1  Loan  Assn. 

nov/  or  heretofore  doing  business  in  this  state;  and  pro- 
vided, further,  that  any  such  association  having  in  its 
corporate  name  words  not  clearly  indicating  the  nature 
of  its  business  shall,  on  all  signs,  letterheads  and  adver- 
tising matter,  state:  "This  is  a  building  and  loan  associa- 
tion" or  words  to  that  effect;  and  provided,  further,  that  Any  Bidg.  &  Loan 

Assn.  may  borrow 

any  building  and  loan  association  may  borrow  money,  money,  etc. 
issue  investment  certificates  or  evidences  of  indebtedness, 
stating  the  rate  of  interest  and  terms  and  conditions  of 
repayment,  and  do  such  other  business  as  may  be  author- 
ized by  the  laws  of  the  state  relating  to  building  and 
loan   associations;    and    provided,    further,    that    no    such  No  Bidg.  &  Loan 

...      A5,sn.  shall  hold  itself 

association  shall  advertise  or  hold  itself  out  to  the  public  out  as  savings  bank. 
as  a  savings  bank. 

[25] 


§  1 2b- 12c  BLYTH,  WITTER  &  CO. 

Right  of  foreign  cor-       Section  12b.     Nothing  in  this  act  shall  be  construed  or 

porat'.on  chartered 

as  life  insurance  and  beld  to  apply  to  any  Corporation  organized  under  the  lav/s 

trust  company  to  use  *  »    .'  ••  •■  ^ 

corporate  title,  of  any  Other  state  which  is  authorized  by  its  charter  or 
articles  of  incorporation  to  transact  the  business  of  life 
insurance  and  also  to  be  known  as  and  to  transact  busi- 
ness as  a  trust  company  and  which  shall  have  complied 
with  the  laws  of  the  state  affecting  the  transaction  in  this 
state  of  the  business  of  life  insurance  by  a  foreign  cor- 
poration and  w^hich  shall  have  heretofore  engaged  in 
such  business  of  life  insurance  in  this  state,  in  such  man- 
ner as  to  forbid  or  prevent  its  making  use  of  its  corporate 
title  in  its  life  insurance  business  in  this  state  in  any  such 
way  and  to  any  such  extent  as  it  might  have  made  use  of 
the  same  if  this  act  had  not  been  passed. 

Foreign  corporation       Section    1 2c.      Any  Corporation   organized   under  the 

complying  with  laws 

of  California  not  en-  laws  of  anv  country  or  state  other  than  this  state  which 

gaged  in  banking 

may  maintain  has  Complied  with  all  of  the  laws  of  this  state  pertaining 

state   offices   to    lend  c  •  •  •  .  . 

money,  buy  or  sell  to  foreign  Corporations  and  is  not  engaged  m  the  business 

bonds,  etc.      /•ii*  ••  i  ..,. 

of  banking  or  receiving  money  on  deposit  in  this  state 
may  lend  money  or  buy  and  sell  bonds  in  this  state,  and 

for  that  purpose,  may  maintain  offices  in  this  state,  and 
sue  and  be  sued  in  this  state  under  its  proper  corporate 
name,  notwithstanding  any  prohibitions  contained  in  this 
act  as  to  the  use  of  any  words  in  the  name,  signs  or  adver- 
tising matter  of  corporations  not  under  the  supervision  of 
Representative  of  the  superintendent  of  banks;   provided,    that  nothing  in 

foreign  banking  or     ,   .  i      ii    i  i  i   -i   • 

trust  company  not  this  act  Shall  be  construed  to  prohibit  any  representative 

prohibited  from       £  f  •  1  l   •  •  r  ... 

maintaining  as  such  OF  any  toreign  banking  corporation  rrom  maintaining  an 
office  in  this  state  as  the  office  of  a  representative  and  not 
the  place  of  business  of  a  bank  or  trust  company,  nor  to 
prohibit  such  representative  from  making  use  of  any 
office  sign  at  the  place  where  such  representative's  office 
is  maintained  having  thereon  words  indicating  that  such 
office  is  the  place  of  business  of  a  representative  of  a  for- 

Such  representative      •  i  i  i  •  i      i      r        i  i 

may  use  foreign  cign  bank  or  trust  Company;  and  provided,  further,  that 

bank's  printed  mat-  .  r        r  •  i  i  ...  -^ 

ter  in  transacting  any  representative  or  a  foreign  bank  maintaining  an  office 

business  as  repre-        ...,.  ■,  .  ir-i-i" 

sentative.  Within  this  State  may  make  use  of  such  foreign   bank  s 

r261 


GENERAL  PROVISIONS  §  i2c-l3 


letterheads,  circulars  and  other  printed  matter  in  the 
transaction  of  business  as  such  representative;  and  pro- 
vided,  further,   every  representative  of  any  foreign  bank  Such  representative 

'    *  '  -'  ^  ^  ^  must  first  obtain 

or  trust   company  before   opening  an   office   as  a   repre-  license  from  supt. 

^        •>  IT  a  to    open    office. 

sentative  shall  have  received  a  license  from  the  superin- 
tendent of  banks  to  open  such  representative's  office. 
Such  license  may  be  issued  upon  application  to  the  super- 
intendent of  banks  and  the  payment  of  an  annual  license 
fee  of  fifty  dollars  and  may  be  refused  or  revoked  by  the 
superintendent  of  banks  at  his  discretion. 

[Note  by  Publishers,   re   Section  12c,   amended  1917: 

This  amendment  allows  a  representative  of  a  foreigrn  bank  to  open  an  office 
in  this  State  for  the  purpose  of  distributing  information  and  assisting  in  a  general 
way  in  the  conduct  of  the  banking  business.  Under  the  law  as  it  stood,  it  was 
impossible  for  a  foreign  bank  to  open  an  office  in  this  State  at  all,  unless  it 
cualified  by  assigning  the  required  capital  and  receiving  a  certificate  from  this 
State.  It  was  concluded  that  this  was  an  unnecessary  restriction  and  that  repre- 
sentatives of  foreign  banks  might  properly  open  offices  to  assist  in  the  distribu- 
tion of  knowledge  and  gathering  of  information  that  is  very  helpful  not  only  to 
themselves  but  to  the  banks  of  this  State,  and  this  amendment  extended  that 
privilege.] 

Section  1  3.    No  corporation,  domestic  or  foreign,  other  Power  of  express 

company  to  handle 

than  a  corporation  formed  under  or  subject  to  the  bank-  exchange,  etc. 
ing  laws  of  this  state  or  of  the  United  States,  except  as 
permitted  by  such  laws,  or  other  than  an  express  com- 
pany as  hereinafter  defined  in  this  section,  shall  by  any 
implication  or  construction  be  deemed  to  possess  the 
power  of  carrying  on  the  business  of  discounting  bills, 
notes  or  other  evidences  of  debt,  of  receiving  deposits,  of 
buying  and  selling  bills  of  exchange,  or  of  issuing  bills, 
notes  or  other  evidences  of  debt  for  circulation  as  money, 
or  of  engaging  in  any  other  form  of  banking;  nor  shall 
any  such  corporation,  except  an  express  company  having 
contracts  with  railroad  companies  for  the  operation  of  an 
express  service  upon  the  lines  of  such  railroad  companies, 
or  a  transatlantic  steamship  company,  or  a  transpacific 
steamship  company,  or  a  telegraph  company,  or  a  tele- 
phone company,  possess  the  power  of  receiving  money 
for  transmission  or  of  transmitting  the  same,  by  draft, 
traveler's  check,  money  order  or  otherwise. 

[Note  by  Publishers,  re  Section  13,   amended  in   1917. 

The  purpose  of  this   amendment  was  to  simplify  the   expression  of  the  section 
and  better  to  control  the   activities  of  express  companies  and  telephone   and   tele- 

[27] 


§  14-15  BLYTH,  WITTER  &   CO. 

^aph  companies  in  the  matter  of  handling  exchange.  The  Bank  Act  formerly 
contained  a  strict  prohibition  against  the  exercise  of  this  banking  function  except 
by  banks.  In  1915  the  law  was  amended  that  transportation  and  express  com- 
panies might  receive  a  certificate  under  certain  circumstances,  but  that  also  was 
found  not  quite  to  meet  the  case.  The  State  Banking  Department  believe  that 
this  amendment  makes  it  better  and  easier  for  such  corporations  to  perform  their 
service  and  at  the  same  time  not  encroach  upon  the  proper  field  of  banking.] 

Advertisement  of       Section  1  4.     No  bank,  or  officer  thereof,  shall  advertise 

capital.    .  1  I-    1  r      1  •      1 

m  any  manner,   or  publish  any  statement  or  the  capital 

authorized   or  subscribed,    unless  it   or  he  advertise  and 

publish   in   connection   therewith,    the   amount   of   capital 

Joint  advertising  actually  paid  up.      No  bank  shall  publish  a  statement  of 

condition  of  two 

banks,  its  resources  or  liabilities  in  connection  with  those  of  any 
other  bank,  unless  such  statement  shall  show  the  resources 
and  liabilities  of  each  bank  separately;  nor  shall  surplus 
and  undivided  profits  be  advertised  as  an  aggregate. 

All  deposits,  un-        Section  1  5.     All  amounts  of  money  heretofore  or  here- 

claimed  or  not  with-  -^ 

drawn  for  20  years,  after  deposited  with  any  bank  to  the  credit  of  depositors 

to  be  deposited  with 

State  Treasurer,  who  have  not  made  a  deposit  on  said  account  or  with- 

after  judgment,  as 

provided  by  law.  drawn  any  part  thereof  or  the  interest  and  v/hich  shall 
have  remained  unclaimed  for  more  than  twenty  years 
after  the  date  of  such  deposit,  or  withdrawal  of  any  part 
or  principal  or  interest,  and  where  neither  the  depositor 
or  any  claimant  has  filed  any  notice  with  such  bank  show- 
ing his  or  her  present  residence,  shall,  with  the  increase 
and  proceeds  thereof,  be  deposited  with  the  state  treas- 
urer after  judgment  in  the  manner  provided  in  the  Code 
Court  procedure  to  of  Civil  Procedure.      At  the  time  of  issuing  the  summons 

be  followed  in  ob-    .         ,  .  •  i      i    r         •  •  i  o  -7  o       r     i        /^      i  r 

taining  such  judg-  m  the  actioii  provided  ror  in  section   IZ/ 3  or  the  <^ode  or 

ment  against  bank    >->..,    r-,  i  i  i       i        i       11       i  •  •  •  1 

and  all  claimants.  L-iviI  rrocedure,  the  clerk  shall  also  issue  a  notice  signed 
by  him,  giving  the  title  and  number  of  said  action,  and 
referring  to  the  complaint  therein,  and  directed  to  all 
persons,  other  than  those  named  as  defendants  therein, 
claiming  any  interest  in  any  deposit  mentioned  in  said 
complaint,  and  requiring  them  to  appear  within  sixty 
days  after  the  first  publication  of  such  summons,  and 
show  cause,  if  any  they  have,  why  the  moneys  involved 
in  said  action  should  not  be  deposited  with  the  state 
treasurer  as  in  said  section  provided,  and  notifying  them 
that  if  they  do  not  so  appear  and  show  cause,   the  state 

[28] 


GENERAL  PROVISIONS n5 

v/ill  apply  to  the  court  for  the  reHef  demanded  in  the 
complaint.  A  copy  of  said  notice  shall  be  attached  to 
and  published  with  the  copy  of  said  summons  required 
to  be  published  by  said  section,  and  at  the  end  of  the 
copy  of  such  notice  so  published  there  shall  be  a  state- 
ment of  the  date  of  the  first  publication  of  said  summons 
and  notice.      Any  person  interested  may  appear  in  said  Any  person  inter- 

.      .  ested  may  become 

action  and  become  a  party  thereto.  Upon  the  completion  par'.y  to  action. 
of  the  publication  of  the  summons  and  notice,  and  the 
service  of  the  summons  on  the  defendant  bank,  or  banks, 
as  in  said  section  1273  of  the  Code  of  Civil  Procedure 
provided,  the  court  shall  have  full  and  complete  jurisdic- 
tion over  the  state,  and  the  said  deposits  and  of  the  per- 
son of  every  one  having  or  claiming  any  interest  in  the 
said  deposits,  or  any  of  them,  and  shall  have  full  and 
complete  jurisdiction  to  hear  and  determine  the  issues 
therein,  and  render  the  appropriate  judgment  thereon. 
The  president  or  managing  officer  of  every  bank  must,  President  or  manag- 
within  fifteen  days  after  the  first  day  of  January  of  every  must  annually  return 

.  .  f    1  1  11         sworn  statement 

year,  return  to  the  superintendent  or  banks  and  to  the  showing  matters  set 
state  controller  a  sworn  statement  showing  the  names  of 
depositors  known  to  be  dead,  or  who  have  not  made  fur- 
ther deposits,  or  withdrawn  any  moneys  during  the  pre- 
ceding twenty  years.  Such  statement  shall  show  in  detail 
the  following  matters,  viz. : 

First — The  name  and  last  known  place  of  residence  or 
postoffice  address  of  the  person  making  such  deposit; 

Second — The  amount  and  date  of  such  deposit  and 
whether  the  same  are  in  moneys  or  securities,  and  if  the 
latter,  the  nature  of  the  same; 

Third — The  interest  due  on  such  deposit,  if  any,  and 
the  amount  thereof; 

Fourth — The  sum  total  of  such  deposit,  together  with 
the  interest  added  thereto  due  from  such  bank  on  account 
of  such  deposit  or  deposits  and  the  interest  thereon   to 

[29] 


forth  In  section. 


§  15  BLYTH,  WITTER  &   CO. 

such  depositor,  but  nothing  contained  herein  shall  require 

any  corporation  or  person  renting  lock  boxes  or  safes  in 

vaults  for  storage  purposes  to  open  or  report  concerning 

Aforesaid  reports  property  Stored  therein.     Such  reports  itemized  as  afore- 

shall  be  sworn  to.         .iini  .  iiiL  i*  .1  i 

said  shall  be  signed  by  the  person  making  the  same  and 
shall  be  sworn  to  before  a  person  competent  to  adminis- 
ter oaths  as  a  full,  complete  and  truthful  statement  of 
each  of  the  items  therein  contained. 

Bank  must  return       The  president  or  managing  officer  of  every  bank  must, 

biennial  statement         .   t   .       n  c 

of  depositors  de-  within  fifteen  days  after  the  first  day  of  January  of  every 

ceased  or  not  making 

or  withdrawing  de-  odd  numbered  year,  return  to  the  superintendent  of  banks 

posits  during  preced-  i  •  1  r       1  • 

ing  10  years,  a    swom    Statement    showing    the    names    of    depositors 
known   to  be  dead,   or  who  have  not  made   further  de- 
posits,   or  withdrawn  any  moneys   during   the  preceding 
What  such  state-  ten  years.      Such   statements  shall   show  the  amount  of 

ments  shall  show.  1         i  •         •     1  1 

the  account,  the  depositor  s  last  known  place  of  residence 

or  post-office  address,  and  the  fact  of  death,  if  known  to 

such  president  or  managing   officer.      Such   president   or 

Notice  of  deposits  to  managing  officer  must  give  notice  of  these  deposits  in  one 

be  published.  &      t>  fc.       ^  ^  f 

or  more  newspapers  published  in  or  nearest  to  the  town 
or  city  where  such  bank  has  its  principal  place  of  busi- 
ness, at  least  once  a  w^eek  for  four  consecutive  w^eeks,  the 
cost  of  such  publication  to  be  paid  pro  rata  out  of  such 
Section  not  appiic-  unclaimed  deposits.     This  section  does  not  apply  to  any 

able  to  deposit  by  or,.,,  .,  -  ,  . 

in  name  of  person  deposit  made  by  or  m  the  name  of  a  person  known  to  the 

known  to  officer  to  .  ,  .  _~  1         !•     •  --ri 

be  living,  president  or  managing  orhcer  to  be  living.  1  he  superin- 
tendent of  banks  must  incorporate  in  his  subsequent  re- 
port such  returns  made  to  him  as  provided  in  this  sec- 
Penaities.  tion.  If  any  president  or  managing  officer  of  any  bank 
neglects  or  refuses  to  make  the  sworn  statements  required 
by  this  section  such  bank  shall  forfeit  to  the  State  of 
California  the  sum  of  one  hundred  dollars  a  day  for  each 
day  such  default  shall  continue.  Any  president  or  manag- 
ing officer  of  any  bank  w^ho  violates  any  of  the  provisions 
of  this  section  shall  forfeit  to  the  State  of  California  the 
Date  of  receipt  of  sum  of  One  hundred   dollars  a  day  for  each  and   every 

deposits  transferred     i  i  •     i     .•  i      ii  ••  r-  .1  r 

from  another  bank,  day  such  Violation  shall  continue,      ror  the  purposes  or 

[30] 


under  Section  not 
thereafter  liable. 


GENERAL  PROVISIONS  §  15-17 

this  section  all  deposits  received  by  any  bank  under  the 
provisions  of  section  thirty-one  or  section  thirty-one-a  of 
this  act  shall  be  deemed  to  have  been  deposited  with 
such  bank  at  the  time  the  deposit  was  made  with  the 
bank  from  w^hich  the  deposit  was  transferred;  provided.  Bank  making  deposit 

,  111*1111  1  1  ••11  with  State  Treasurer 

that  any  bank  which  shall  make  any  deposit  with  the  state 
treasurer  in  conformity  with  the  provisions  of  this  section 
shall  not  thereafter  be  liable  to  any  person  for  the  same 
and  any  action  which  may  be  brought  by  any  person 
against  any  bank  for  moneys  so  deposited  with  the  state 
treasurer  shall  be  defended  by  the  attorney  general  with- 
out cost  to  such  bank. 

[Note  by  Publishers,   re  Section  15,   as  amended  1915: 

A  copy  of  Section  1273,  Code  of  Civil  Procedure,  which  section  is  referred  to 
in  the  above  section  is  set  forth  in  Appendix  at  the  end  of  this  Act.] 

(Section  16.      Repealed  1919.) 

[Note  by  Publishers,  re  Section  16,   repealed  1919: 

The  first  paragraph  of  Sec.  16  is  simply  declarative  of  the  right  of  Savings 
Banks  to  indulge  a  joint  deposit  with  right  of  survivorship.  It  was  not  deemed 
necessary  to  retain  that  part  of  the  section.  (See  Crowley  vs.  Union  Savings 
Bank  and  Trust  Co.,  30  Cal.,  App.  144,  and  McCarty  vs.  Holland,  30  Cal.,  App. 
495.) 

The  second  and  last  paragraphs  of  Section  16  of  the  Bank  Act  and  Section  1454 
of  the  Code  of  Civil  Procedure  were  substantially  the  same.  Both  related  to  a 
privilege  granted  to  certain  surviving  heirs  of  a  deceased  depositor  in  a  bank  to 
withdraw  from  that  bank  any  sum  not  greater  than  $1,000  if  that  sum  is  the 
aggregate  of  all  moneys  deposited  in  banks  of  this  State  by  the  deceased  deposi- 
tor. There  was  pending  before  the  Legislature  at  the  1919  Session  just  closed  an 
amendment  to  said  Section  1454  to  permit,  under  similar  conditions,  the  addi- 
tional right  of  receiving  personal  property  on  deposit  or  iu  safe  deposit  boxes  in 
an  amount  not  to  exceed  $500.  In  order  not  to  provoke  a  conflict  as  between 
that  Section  and  Section  16  of  the  Bank  Act,  Section  16  was  repealed.  The 
amendment  to  Section  1454,  however,  failed  of  passage,  and  the  subject  is 
therefore  governed  by  Section  1454  in  its  existing  form.  For  a  copy  of  said 
Section,  see  Appendix.] 

Section    1  7.      Every  bank   now  in   existence   or   here-  ^g^^^^^^jg^j^^"  orsto^ck- 

holders  and  their 


holdings. 


after  organized  shall  keep  in  its  offices,  in  a  place  access- 
ible to  the  stockholders,  depositors,  and  creditors  thereof, 
and  for  their  use,  a  book  containing  a  list  of  stockholders 
in  such  corporation,  and  the  number  of  shares  of  stock 
held  by  each ;  and  every  such  bank  shall  keep  posted  in  Bank  shall  post  in 

,  .  I  .,  J  111-       office  accessible  to 

its  office,  in  a  conspicuous  place,  accessible  to  the  public  pubUc  a  list  of  di- 

,  .  .  Ill  •  1  rectors  and  their 

generally,  a  notice  signed  by  the  president  or  secretary,  share  holdings. 
showing: 

1 .  The  names  of  the  directors  of  such  bank. 

2.  The  number  and   the  par  value  of  the  shares  of 
stock  held  by  each  director, 

[31] 


§  17-19 BLYTH.  WITTER  &   CO. 

Entries  on  such        The  entries  on  such  book  and  such  notice  shall  be  made 

Dock  and  notice  to 

7)6  posted  within  24  ^^d   posted   within   twenty-four  hours  after  any   transfer 

hours  after  stock  ^ 

transfer,  q^  stock,  and  shall  be  prima  facie  evidence  against  each 
director  and  stockholder  of  the  number  of  shares  of 
stock  held  by  each. 

(Section    18.      Repealed  1913.) 

Percentage  of  paid-       Section  19.     The  aggregate  of  paid-up  capital  together 

up  capital  and  sur-        .11  i<-  -ill  1 

plus  to  deposits,  w^ith  the  surplus,   or  every  commercial   bank,   must  equal 

ten  per  centum  of  its  deposit  liabilities.      The  aggregate 

Percentage  of  paid-  of    paid-up    Capital    and    surplus    of   every   savings   bank 

up  capital  and  sur-    i-  •jl1«.1  liU  £lf 

plus  of  savings  bank  havmg  a  Capital   stocK,    and   the   reserve   fund    or   every 
au'd^e'seive'^funTof  savings  bank  without  a  capital  stock,  must  equal  the  fol- 

savings  bank  with-  1  •  .  f   'i.      J  -i.   !•    l_-l"i.' 

out  capital  stock,  lowmg  percentages  of  its  deposit  liabilities: 

(a)  Ten  per  centum  of  any  amount  up  to  and  includ- 
ing two  million  dollars. 

(b)  Seven  and  one-half  per  centum  of  any  amount  in 
excess  of  two  million  dollars  up  to  and  including  five 
million  dollars. 

(c)  Five  per  centum  of  any  amount  in  excess  of  five 
million  dollars  up  to  and  including  fifteen  million  dollars. 

(d)  Two  and  one-half  per  centum  of  any  amount  in 
excess  of  fifteen  million  dollars  up  to  and  including  forty 
million  dollars. 

(e)  One  per  centum  of  any  amount  in  excess  of  forty 
million  dollars. 

Restriction  on  in-        The  deposits  shall  not  be  increased  if  such  proportion 

crease  of  deposits.       r  •  1  -iii  rii* 

of  paid-up  capital  and  surplus  or  reserve  fund  to  deposit 
liabilities  is  not  maintained,  and  in  no  event  shall  said 
paid-up  capital  be  less  than  the  minimum  paid-up  capital 
provided  by  this  act;  provided,  that  such  deposit  liabilities 

Deposit  liabilities 

to  be  exclusive  of  shall  be  cxclusive  of  United  States  and  postal  savings  de- 

governmental  de-  .  ,  rio  r  r~-    i-r 

posits,  posits  and  deposits  of  the  State  of  California  and  of  any 

[32] 


GENERAL  PROVISIONS  §  19-20 

county  and  municipality  in  the  State  of  California  which 
are  secured  as  required  by  law. 

[Note  by  Publishers,  re  Section   19,   amended   1919: 

This  amendment  releases  deposits  of  the  United  States  and  deposits  of  the 
State  of  California  and  of  any  county  and  municipality  in  the  State  of  California 
which  are  secured  as  required  by  law  from  the  aggregate  of  deposit  liability 
against  which  capital  must  be  maintained  in  the  commercial  and  savings  banks  of 
this  State.  The  fact  that  these  public  deposits  are  secured  makes  it  unnecessary 
to  require  a  double  security  by  adding  to  the  collateral  pledged  by  the  bank  for 
the  deposits  an  increase  in  capital  of  the  bank.  The  purpose  of  the  amendment 
is  to  relieve  State  banks,  without  in  any  sense  lessening  their  responsibility  in 
capital,  from  a  burden  which  the  national  laws  do  not  require  from  National 
banking  associations.] 

Section    20.       Every   commercial   bank   shall   maintain  Commercial  bank  to 

,  .  .  1  •  1        •  f   maintain  total  re- 

total  reserves  against  its  aggregate  deposits,   exclusive  or  serves  against  ag- 

rr.ic^  1  1  .  1  .  11  .  r  BTegate  deposits  as 

United  otates  and  postal  savings  deposits  and  deposits  or  specified. 
the  State  of  California  and  of  any  county  and  municipality 
in  the  State  of  California,  which  are  secured  as  required 
by  law,  as  follows: 

1 .  Eighteen  per  centum  of  such  deposits  if  such  bank 
has  its  principal  place  of  business  in  a  city  having  a  popu- 
lation of  one  hundred   thousand  or  over. 

2.  Fifteen  per  centum  of  such  deposits,  if  such  bank 
is  located  in  a  city  having  a  population  of  fifty  thousand 
or  over  and  less  than  one  hundred  thousand. 

3.  Twelve  per  centum  of  such  deposits  if  such  bank  is 
located  elsewhere  in  the  State. 

At  least  one-half  of  the  total  reserves  shall  be  main-  Total  reserves;  how 

.  111111  maintained  and  con- 

tained as  reserves  on  hand  and  shall  consist  of  gold  bul-  stituted. 

lion  or  any  form  of  money  or  currency  authorized  by  the 

laws  of  the  United  States,  and  the  remainder  of  the  total 

reserves  required  by  the  provisions  of  this  section  shall 

be  maintained  as  reserves  on  deposit  or  as  reserves  on 

hand;   such  reserves  on  hand   to  consist  of  gold  bullion 

or  any  form  of  money  or  currency  authorized  by  the  laws 

of  the  United  States;  provided,  however,  that  all  or  any  ah  or  part  of  re- 

.        £    i.r  1  1  •        1  1    .  11      serves  may  be  de- 
part ot  the  reserves  may  be  deposited,   subject  to  call,  posited  with  Federal 

with  a  federal  reserve  bank  in  the  district  in  which  such 

bank  is  located. 

[33] 


§  20  BLYTH.  WITTER  &   CO. 


Bank  becoming  mem.        jf  ^nv  bank  shall  havc  becomc  a  member  of  a  federal 

bar  of  Federal  Re-  ,,.,,,  i  •  i        i 

Berve  Bank  to  com-  reserve  bank,    It  shall   comply  with   the   reserve  require- 

ply  with  require-  ^  . 

ments  of  Federal  ments  of  the  federal  reserve  act  and  its  amendments,  and 
its  compliance  therewith  shall  be  in  lieu  of,  and  shall 
relieve  such  bank  from  compliance  with,  the  provisions  of 
this  section. 

Penalties  for  not        Jf  ^nv  bank  shall  not  maintain  the  total  reserves  re- 
maintaining  total  .  1  r  1        1  •  1 
reserves  required,  quired  the  Superintendent  of  banks  may  impose  a  penalty 

upon  it,  based  upon  the  length  of  time  such  encroachment 
upon  its  total  reserves  amounting  to  one  per  centum  or 
more  of  its  aggregate  deposits  shall  continue,  at  the  fol- 
lowing rates: 

1 .  At  the  rate  of  six  per  centum  per  annum  upon  any 
such  encroachment  not  exceeding  two  per  centum  of  such 
deposits. 

2.  At  the  rate  of  eight  per  centum  per  annum  upon 
any  additional  encroachment  in  excess  of  two  and  not 
exceeding  three  per  centum  of  such  deposits. 

3.  At  the  rate  of  ten  per  centum  per  annum  upon  any 
additional  encroachment  in  excess  of  three  and  not  ex- 
ceeding four  per  centum  of  such  deposits. 

4.  At  the  rate  of  twelve  per  centum  per  annum  upon 
any  additional  encroachment  in  excess  of  four  per  cen- 
tum of  such  deposits. 

Designation  by  Supt.       The  Superintendent  of  banks  shall,    in  his  discretion, 

of  depositary  for  |  .  .  ,  i  i         i       ■  i  • 

reserves  on  deposit,  upon  the  nomination  ot  any  bank,  designate  a  depositary 
or  depositaries  for  the  reserves  on  deposit  of  such  bank 
provided  for  by  this  act.  Except  as  otherwise  provided 
in  this  section,  such  depositary  shall  be  a  bank  or  na- 
tional banking  association  located  in  this  state.  Every 
Total-reserve  require-  reserve  depositary,  which  has  its  principal  place  of  busi- 
™^°*^ depoTitrry!  "^^^  in  a  judicial  township  or  in  a  city  located  in  this  state 
in  which  the  population  is  less  than  fifty  thousand,  shall 
have  at  all  times  as  its  total  reserves  an  amount  equal  to 

[34] 


GENERAL  PROVISIONS  §  20 

the  total  reserves  required  by  the  provisions  of  this  sec- 
tion for  every  bank  which  has  its  principal  place  of  busi- 
ness in  a  city  having  a  population  of  fifty  thousand  or 
over  and  less  than  one  hundred  thousand.     But  no  bank  Requirements  of  bank 

111-  •       •  1111  f  1  1       .         "■■  ^**^'  ''an^ine 

or  national  banking  association  shall  hereafter  be  desig-  Assn.  to  be  desig- 

,  ,  .  -  ,  ,  111    °*te<l  *s  reserve  de- 

nated  as  a  depositary  or  any  such  reserves  unless  it  shall  positary. 
have  a   combined   capital   and   surplus   of  not  less   than 
the  following  amounts: 

1.  Two  hundred  fifty  thousand  dollars,  if  located  in 
a  city  which  has  a  population  of  three  hundred  thousand 
or  over; 

2.  Two  hundred  thousand  dollars,  if  located  in  a  city 
which  has  a  population  of  one  hundred  thousand  or  over 
and  less  than  three  hundred  thousand; 

3.  One  hundred  fifty  thousand  dollars,  if  located  in  a 
city  which  has  a  population  of  fifty  thousand  or  over  and 
less  than  one  hundred  thousand; 

4.  One  hundred  thousand  dollars,  if  located  elsewhere 
in  the  state. 

Such  depositary  may  also  be  a  banking  corporation  such  depositary  may 

.1  •      1  1  1  f  -ii-  1     11  a^s°  ^e  banking  cor- 

with  a  capital  and  surplus  or  one  million  dollars  or  more,  poration  with  capital 
located  in  any  city  in  the  United  States.  specified." 

If  the  total  reserves  of  any  bank  shall  be  less  than  the  Effect  of  impairment 

.■i»  i.  .  i-iitii  .of  total  reserves. 

amount  required  by  this  section,  such  bank  shall  not  in- 
crease  its   liabilities  by   making   any   new   loans   or   dis- 
counts,  otherwise  than  by  discounting  bills  of  exchange 
on  sight,   or  by  paying  any  dividends  from  profits  until 
the   full  amount  of  its  total  reserves  has  been  restored. 
The  superintendent  of  banks  may  notify  any  bank  whose  Bank  failing,  after  so- 
total  reserves  shall  be  below  the  amount  herein  required,  supt.,  to  restore  total 
to  restore  such  total  reserves;  and,  if  it  shall  fail  for  thirty  solvent!' 
days  thereafter  to  restore  such  total  reserves,  such  bank 
shall  be  deemed  insolvent  and  may  be  proceeded  against  Deposits  to  comply 
under  the  provisions  of  this  act;  provided,  that  all  deposits 

[35] 


§  20 


BLYTH.  WITTER  &   CO. 


of  money  herein  permitted  or  required  shall  comply  with 
the  provisions  of  section  forty-three  of  this  act. 

Definitions—       The  term,  "reserves  on  hand,"  when  used  in  this  act, 

'Reserves  on  hand."  ,  .  ,  •.      i         ^  .    .       .1 

means  the  reserves  agamst  deposits  kept,  pursuant  to  the 
provisions  of  this  act,  in  the  vault  of  any  bank  or  in  any 
safety  deposit  box  in  any  other  bank  in  this  state,  said 
box  to  be  under  the  exclusive  control  of  the  depositing 
bank. 

"Reserves  on  de-        The   term,    "reserves  on   deposit,"   when   used   in   this 

posit." 

act,  means  the  reserves  against  deposits  maintained  by 
any  bank  pursuant  to  this  act  in  reserve  depositaries,  or 
in  a  federal  reserve  bank  in  the  district  in  which  such 
bank  is  located  and  not  in  excess  of  the  amount  author- 
ized by  this  act. 

"Total  reserves."  The  term,  "total  reserves,"  when  used  in  this  act, 
means  the  aggregate  of  reserves  on  hand  and  reserves  on 
deposit  maintained  pursuant  to  the  provisions  of  this  act. 


'Reserve  depositary. 


The  term,  "reserve  depositary,"  when  used  in  this  act, 
means  a  bank,  trust  company  or  banking  corporation  des- 
ignated by  the  superintendent  of  banks  on  the  nomination 
of  the  depositing  bank  as  a  depositary  for  reserves  on 
deposit. 

[Note  by  Publishers,  re  Section  20,  amended  in   1917  and  1919: 

By  the  1919  amendment  Section  20  was  made  the  first  of  a  series  of  amend- 
ments intended  to  bring  the  banks  of  the  State  system  into  relationship  estab- 
lished by  membership  in  Federal  Reserve  Banks  with  the  Federal  system,  but 
without  in  any  way  invading  or  impairing  the  scheme  of  reserves  as  fixed  by 
the  Bank  Act  of  California.  The  other  sections  of  said  series  of  amendments 
providing  for  the  entrance  of  State  banks  into  the  Federal  Reserve  system  as 
member  banks,  are  Sections  56  and  68.  For  the  scope  and  purpose  of  these 
last  two  sections,  reference  is  made  to  the  same  and  to  the  notes  thereto  in  this 
edition. 

The  1919  amendment  of  Section  20  assumes  two  forms:  First,  it  permits  the 
carrying  of  reserves  on  hand  in  any  money  or  currency  authorized  by  the  laws  of 
the  United  States;  and,  Second,  permits  any  bank  in  the  State  to  carry  any  or  all 
of  its  reserves,  either  those  on  hand  or  those  on  deposit,  in  a  Federal  Reserve 
bank.  The  primary  consideration  is  to  permit  such  banks  of  the  State  system  as 
become  members  of  the  Federal  Reserve  Bank  to  carry  reserves  established  by  the 
Federal  Reserve  Board  for  all  member  banks  of  the  system,  in  lieu  of  the  reserves 
demanded  by  the  Bank  Act  of  California.  The  1919  amendment  enables  any  bank 
under  the  jurisdiction  of  the  laws  of  California,  whether  a  member  of  the  Federal 
Reserve  Bank  or  not,  to  contribute  its  gold  to  the  Federal  Reserve  banks  without 
a  violation  of  our  State  law,  and  the  change  also  gives  full  freedom  to  all  of  the 
banks  in  the  State  to  avail  themselves  of  the  privilege  of  entering  the  Federal 
Reserve  system  as  State  member  banks. 

The  1917  amendment  amended  the  section  in  one  rather  important  matter, 
namely,  to  permit  banks  to  have  part  or  all  of  their  reserves  on  hand,  which 
heretofore  had  to  be  held  in  their  own  vaults;  for  instance,  in  safe  deposit  vaults. 

[361 


GENERAL  PROVISIONS  §  2  I 


These  reserves  must  be  kept  under  the  actual  control  of  the  banks  owning  them 
and  be  accessible  only  to  themselves;  the  purpose  being,  of  course,  to  save  the 
small  bank  in  an  isolated  town  from  the  hazard  of  burglary,  a  danger  that  has 
caused  a  good  deal  of  concern  in  the  smaller  places.  The  1917  amendment  enables 
the  smaller  banks  to  have  their  reserves  in  the  larger  centers,  thus  affording 
ample  protection.] 

Section  2  1 .     The  directors  of  any  bank  having  a  capi-  Directors  of  bank 

,  ,  .         .  1    •  L  'j.      having  capital  stock 

tal  stock  may,  at  certain  times,  and  in  such  manner  as  its  may  declare  and  pay 

,,  .,  ,1  I  i--iiil  •      dividends,  as  speci- 

by-laws  prescribe,  declare  and  pay  dividends  to  deposi-  fled. 
tors  and  stockholders  of  so  much  of  the  profits  of  the 
bank,  and  of  the  interest  arising  from  the  capital,  sur- 
plus and  deposits,  as  may  be  appropriated  for  that  pur- 
pose under  its  by-laws  or  under  its  agreements  with  de- 
positors, but  every  such  bank  shall,  before  the  declara- 
tion of  any  such  dividend,  carry  at  least  one-tenth  part 
of  the  net  profits  of  the  stockholders  for  the  preceding 
half  year,  or  for  such  period  as  is  covered  by  the  divi- 
dend, to  its  surplus,  until  such  surplus  shall  amount  to 
twenty-five  per  centum  of  its  paid-up  capital  stock.  The 
whole  or  any  part  of  such  surplus,  if  held  as  the  exclusive  surplus  convertible 

(.,  1111  ..  i'U  into  paid-in  capital, 

property  or  the  stockholders,   may  at  any  time  be  con-  in  which  event  sur- 

d.i.  -.I-  !•!  i  i_  1         plus  to  be  restored. 

into  paid  in  capital,  in  which  event  such  surplus 

shall  be  restored  in  the  manner  above  provided  until  it 
amounts  to  twenty-five  per  centum  of  the  aggregate  paid- 
up  capital  stock.      Subject  to   the  provisions   of  section  Losses  sustained  in 

r     t  •  1  .^-11  1_1_1     excess  of  undivided 

nineteen  of  this  act,  any  losses  sustained  by  any  such  bank  profits  may  be 
in  excess  of  its  undivided  profits  may  be  charged  to  and  p^i^  from  surplus, 
paid  from  its  surplus,   in  which  event  such  surplus  shall  ^  °' 
be  restored  in  the  manner  above  provided,  to  the  amount 
required  by  law;  provided,  however,  that  any  bank  which 
has  invested  any  portion  of  its  surplus  in  its  bank  prem- 
ises, furniture  and  fixtures,  vaults,  or  safe  deposit  vaults, 
and  boxes  necessary  or  proper  to  carry  on  its  banking 
business  shall  not  be  permitted  to  charge  any  loss  to  that 
portion  of  its  surplus  so  invested.     A  larger  surplus  may 
be  created   and   nothing  herein   contained   shall   be   con- 
strued as  prohibitory  thereof.      The  capital  and  assets  of  Depositors  have 

^  •'  '^  priority  of  security 

any  such  bank   are  a   security   to   depositors   and   stock-  over  stockholders. 
holders,   depositors  having  the  priority  of  security  over 
stockholders. 

[371 


§21a  BLYTH,  WITTER  &   CO. 


Preference  to  depos-       Section  2  1  a.      No  bank,  banker,   or  bank  officer,  shall 

itor  or  creditor  pro- 
hibited, except  as  give   Dcrference   to   any   depositor   or   creditor   except   as 

otherwise  author-  or  -ill 

ized;  otherwise  authorized  by  law;  provided,  that  any  commer- 
cial bank  or  commercial   department  of  a  departmental 
Provided,  commer-  bank,   is  authorized  and  empowered  for  temporary  pur- 

cial  hank  may  bor- 
row money  and  poses,  to  borrow  money,  or  to  borrov/  money  and  pledge 

pledge  assets,  with- 

in  amount  and  upon  or  hypothecate  as  collateral   security   therefor,    its  assets 

conditions  specified,  i  r  r  •  r      l 

not  exceeding  fifty  per  centum  in  excess  of  the  amount 
borrowed,  but  only  to  the  extent  and  upon  terms  and  con- 
ditions as  follows: 

Not  exceeding  cap-        (  ]  )    Any  amount  up  to,  but  not  exceeding  the  amount 

ital  and  surplus; 

provisos  as  to  ex-  of  its  Capital  and  surplus,  without  consent  of  the  superin- 

cess  loans. 

tendent  of  banks;  provided,  however,  that  any  amount 
borrowed,  except  as  otherwise  provided  in  this  section, 
in  excess  of  the  amount  of  its  capital  and  surplus,  at  such 
time  actually  paid  in  and  remaining  undiminished  by 
losses  or  otherwise,  must  first  be  approved  in  writing  by 
the  superintendent  of  banks;  provided,  also,  that  no  ex- 
cess loan  made  to  any  such  bank  shall  be  invalid  or  illegal 
as  to  the  lender,  even  though  made  without  the  consent 
Rediscounting,  notes,  of  the  Superintendent  of  banks;  provided,  also,  that  the 

loans,  etc.,  with 

Federal  Reserve  rediscounting  with  or  without  guarantee  or  endorsement 

bank  not  borrowed        •   i  r      i  i  i  i  r  i       f         i   -ii  r 

money,  w^ith  a  tederal  reserve  bank,  or  notes,  drarts,  bills  or  ex- 
change and  loans  secured  by  obligations  of  the  United 
States,  is  hereby  authorized  and  shall  not  be  limited  by 
the  terms  of  this  act,  and  shall  not  be  considered  as  bor- 
rowed money  within  the  meaning  of  this  section. 

Public  moneys  or        (2)    Any   amount   of   California,    state,    county,    city, 

funds  of  State  and 

its  subdivisions,  city  and  county  funds,  or  any  other  public  money,  in 
the  manner  it  is  or  may  be  authorized  by  law  to  borrow 
and  receive  such  public  money  on  deposit  without  the 
approval  of  the  superintendent  of  banks. 

u.  8.  moneys  and        (3)    Any  amount  of   the   United   States   moneys   and 

postal  savings  and  ^     ^  ^  j 

pledge  of  securiti&s,  postal  savings  moneys  of  the  United  States,  and  receive 

under  U.  8.  laws.   »  ^  •' 

such  moneys  on  deposit,  and  pledge  or  hypothecate  such 
of  its  securities  and  upon  such  terms  as  may  be  required 

[381 


GENERAL  PROVISIONS  §2  la 

by  the  laws  of  the  United  States  or  the  rules  and  regula- 
tions of  the  secretary  of  the  treasury  of  the  United  States, 
without  the  approval  of  the  superintendent  of  banks. 

(4)  Any  amount,  in  addition  to  the  amounts  author-  Buying  from  v.  s. 

,  1    '  t  '  •  r  1  e    ^"""^s  ^"^^  other 

ized  to  be  borrowed  in  this  section,  for  the  purpose  or  u.  s.  obligations. 
buying   from    the    United   States,    United   States    bonds. 
United  States  treasury  certificates,  or  notes  or  obligations 
of  the  United  States. 

(5)  To  rediscount  with  and  sell  to  a  federal  reserve  Rediscounting  with 
bank  any  and   all  such  notes,    drafts,   bills  of  exchange,  bank  notes,  etc.,  as 
acceptances  and  any  other  securities,   with  no  other  re-  ^^®*^^  ^ 
strictions,   and  as  fully,   and  to  the  same  extent  as  this 

privilege  is  given  to  national  bank  members  under  the 
terms  of  the  federal  reserve  act,  or  by  regulations  of  the 
federal  reserve  board  made  pursuant  thereto. 

(6)  No  bank  shall  make  partial  payments  upon  any  Partial  payments 

.  C        ,  r     1  .  upon  deposit. 

certihcate  or  deposit. 

(7)  In  no  case  shall  an  overdraft  of  more  than  ninety  90-day  overdraft 
days'  standing  be  allowed  as  an  asset  of  any  bank. 

(8)  Any  debt  due  to  any  commercial  bank,  on  which  Debt  due  commercial 

•     .  ^  .  i  ■,  -ifi  -If  bank,  when  bad 

interest  is  past  due  and  unpaid  ror  the  period  or  one  year,  debt, 
unless  the  same  is  well  secured,  and  is  in  process  of  col- 
lection,   shall    be   considered    a    bad    debt    and    shall    be 
charged  off  to  the  profit  and  loss  account  at  the  expira- 
tion of  that  time. 

[Note  by  Publishers,  re  Section  21a,    amended   1919: 

The  purpose  of  this  amendment  is  to  establish  the  limitations  within  which 
commercial  banks  in  the  State  system  may  borrow  money.  It  is  intended  to  re- 
strict this  capacity  so  as  to  prevent  inflation,  unwise  and  unwarranted  broadening 
of  activities,  and  the  dangers  involved  in  operating  on  borrowed  money.  The 
amendment  maintains  all  of  those  restrictions,  but  enlarges  the  privilege  of  com- 
mercial banks,  to  rediscount  with  a  Federal  Reserve  bank  such  notes,  drafts,  bills 
of  exchange  and  loans  to  the  same  extent  as  is  granted  by  the  National  law  to 
National  bank  members  of  the  Federal  system.  The  amendment  was  deemed 
necessary  to  place  banks  in  the  State  system  on  a  parity  of  privilege  with  their 
competing  National  bank  members.  The  change  is  demanded  in  order  that  the 
State  banks  may  meet  the  obligations  of  commerce  upon  a  parity  with  commer- 
cial banks  organized  under  the  laws  of  the  Federal   government. 

There  is  permitted  also  the  privilege  to  any  State  commercial 
bank  to  borrow  any  amount  for  the  purpose  of  buying  from  the 
United  States,  United  States  bonds.  United  States  Treasury  Certifi- 
cates,  or   notes  or  obligations   of   the   United      States.      This   is   to 

[39] 


§  22-23  BLYTH.  WITTER  &   CO. 


permit  our  State  Banks  to  play  their  proper  part  in  the  financing 
of  national   obligations.] 

Corporation  so       Section  22.     Any  Corporation  authorized  by  its  articles 

authorized  may  com-       .    .  .  .  i   •  i         i         •  e 

bine  business  of  of  incorporation  SO  to  do,  may  combine  the  business  or 

commercial  and  sav-  -iii  i  •  ii  i.t 

ings  banks  and  trust  a  commercial  bank  and  savings  bank  and  trust  company, 
company,  e  .  ^^  ^^^  ^^^  ^^  more  or  all  of  them;  provided,  that  no  cor- 
poration authorized  to  transact  a  trust  business  and  which 
is  also  organized  to  engage  in  the  business  of  title  insur- 
ance, shall  engage  in  or  combine  the  business  of  a  com- 
mercial bank  or  savings  bank. 

Prerequisites  to       Section  23.    When  a  bank  desires  to  do  a  departmental 

doing  departmental  ,  •        i      n    r  i         •  l  r      i 

business,  busmcss,  it  shall  hrst  obtain  the  consent  or  the  superin- 
tendent of  banks,  and  in  its  application  therefor,  file  a 
statement  making  a  segregation  of  its  capital  and  surplus 
for  each  department.  Such  capital  and  surplus,  when  so 
apportioned  and  approved  by  the  superintendent  of 
banks,  shall  be  considered  and  treated  as  the  separate 
capital  and  surplus  of  such  department  as  if  each  depart- 
ment was  a  separate  bank.  Thereafter  a  bank  may,  from 
time  to  time,  w^ith  the  previous  consent  and  approval  of 

Apportionment  and  the    Superintendent    of   banks    and    subject    to    the    pro- 
segregation  of  capi-      .   .  .  .  .  f     1  •  1 
tai  and  surplus  of  visions  of  section  nineteen  or  this  act,  change  any  segre- 
gation and  apportionment  of  capital  and   surplus  previ- 
ously made  and  make  a  new  segregation  and  apportion- 
Paid-up  capital  stock  ment  of  its  Capital  and  surplus.      Every  bank  hereafter 

requirements.  •         i      i     •  i  i    i         •  i      ii    i  •  i 

organized  doing  a  departmental  business  shall  have  paid 
up,  in  cash,  capital  stock  as  follows: 

(a)    In  any  locality  in  which  the  population  does  not 

exceed  five  thousand  persons,  not  less  than  twenty-five 

Where  population  not  thousand   doUars  if  it   transacts  both   a   commercial   and 

over  5,000.  .  ,         .  i  ,  i  i         i  r 

savings  business,  or  not  less  than  one  hundred  twenty-hve 
thousand  dollars  if  it  transacts  both  a  commercial  and 
trust  business,  or  not  less  than  one  hundred  twenty-five 
thousaid  dollars  if  it  transacts  both  a  savings  and  trust 
business  and  not  less  than  one  hundred  twenty-five  thou- 
sand dollars  if  it  transacts  a  commercial,  savings  and  trust 
business. 

[40] 


GENERAL  PROVISIONS  §  23 


(b)  In  any  city  in  which  the  population  is  more  than  where  population 

^      '  ■^  ■'  1  r  ^'""^  *^°  25,000. 

five  thousand  persons,  but  does  not  exceed  twenty-five 
thousand  persons,  not  less  than  fifty  thousand  dollars  if  it 
transacts  both  a  commercial  and  savings  business,  or  not 
less  than  one  hundred  fifty  thousand  dollars  if  it  transacts 
both  a  commercial  and  trust  business,  or  not  less  than 
one  hundred  fifty  thousand  dollars  if  it  transacts  both  a 
savings  and  trust  business,  and  not  less  than  one  hundred 
fifty  thousand  dollars  if  it  transacts  a  commercial,  sav- 
ings and  trust  business. 

(c)  In  any  city  in  which  the  population  is  more  than  where  population 

^     '  J  J  ,1  25,000  to  100,000. 

twenty-five  thousand  persons  but  does  not  exceed  one 
hundred  thousand  persons,  not  less  than  one  hundred 
thousand  dollars,  if  it  transacts  both  a  commercial  and 
savings  business,  or  not  less  than  two  hundred  thousand 
dollars  if  it  transacts  both  a  commercial  and  trust  busi- 
ness, or  not  less  than  two  hundred  thousand  dollars  if  it 
transacts  both  a  savings  and  trust  business,  and  not  less 
than  two  hundred  thousand  dollars  if  it  transacts  a  com- 
mercial, savings  and  trust  business. 

(d)  In  any  city  in  which  the  population  is  more  than  where  population 

,,,,  11  100,000  to  200,000. 

one  hundred  thousand  persons  but  does  not  exceed  two 
hundred  thousand  persons,  not  less  than  two  hundred 
thousand  dollars,  if  it  transacts  both  a  commercial  and 
savings  business,  or  not  less  than  four  hundred  thousand 
dollars  if  it  transacts  both  a  commercial  and  trust  busi- 
ness, or  not  less  than  four  hundred  thousand  dollars  if  it 
transacts  both  a  savings  and  trust  business,  and  not  less 
than  four  hundred  thousand  dollars  if  it  transacts  a  com- 
mercial, savings  and  trust  business. 

(e)  In  any  city  in  which  the  population  exceeds  two  where  population 

1  1         1      I  1  1  1  1  111    exceeds  200,000. 

hundred  thousand  persons,  not  less  than  three  hundred 
thousand  dollars  if  it  transacts  both  a  commercial  and 
savings  business,  or  not  less  than  five  hundred  thousand 
dollars  if  it  transacts  both  a  commercial  and  trust  busi- 
ness, or  not  less  than  five  hundred  thousand  dollars  if  it 

[41] 


23  BLYTH,  WITTER  &  CO. 


transacts  both  a  savings  and  trust  business,  and  not  less 
than  five  hundred  thousand  dollars  if  it  transacts  a  com- 
mercial, savings  and  trust  business. 

Foregoing  ciassiflca-       The    foregoing    classification    shall    not    apply    to    any 

tion  not  applicable  ■•  ■,  f  ■,        .  .  1-11  •  ^     r  i 

to  existing  bank,  or  bank  already  in   existence  which   has  received   rrom   the 

bank  included  by  .  ,  rii  t  i  ^  ^   • 

annexation  in  larger  Superintendent  Of  banks  a  certihcate  to  do  a  banking 
business;  nor  to  any  bank  the  location  of  which  shall 
have  been  included  by  annexation  or  consolidation  within 
the  limits  of  a  city  of  a  class  requiring  a  larger  capitaliza- 
tion, but  no  bank  thus  excepted  shall  be  permitted  to 
establish  any  new  branch  office  as  provided  in  section 
nine  of  this  act  or  to  remove  its  place  of  business  from 
the  original  limits  of  the  city  or  township  wherein  it  was 
located  prior  to  such  annexation  or  consolidation  until  it 
shall  have  the  capital  required  of  banks  in  such  city  not 
within  said  exception.  Such  excepted  banks  may  not  in 
any  case  decrease  their  capital  stock  but  may  increase  the 
same  in  the  manner  provided  by  law  to  an  amount  either 
greater  or  less  than  that  required  of  banks  in  such  city 
not  within  said  exception.  The  capital  stock  referred  to 
herein  shall  be  increased  from  time  to  time  and  to  the 
same  extent  as  provided  for  in  section  nineteen  of  this 
act. 

Population,  for  pur-        For  the  purposcs  of  this  act,  the  population  shown  and 

poses  of  Act — how 

determined,  determined  by  the  last  preceding  federal  census,  or  any 
subsequent  census  compiled  and  certified  under  any  law 
of  this  state,  shall  be  deemed  to  be  the  population  of  any 
city  in  which  any  such  bank  is  to  be  organized.  If  the 
principal  place  of  business  of  any  bank  so  organized  is 
located  outside  of  the  corporate  limits  of  any  city,  then 
the  population  of  that  portion  of  the  judicial  township  in 
which  said  bank  is  to  have  its  principal  place  of  business, 
which  is  not  included  within  the  boundaries  of  any 
municipal  corporation,  as  such  population  is  shown  and 
determined  by  such  federal  or  subsequent  official  census, 

[421 


GENERAL  PROVISIONS         §  24-25 

shall  be  the  basis  for  classification  under  the  provisions  of 
this  act. 

Section   24.      Every  bank,  before  it  commences  to  do  Bank  before  com- 
mencing business  or 
business  or  before  it  opens  a  new  department  and  com-  opening  new  depart- 
ment shall  obtain 

mences  to  transact  business  in  or  under  such  new  depart-  certificate  of  supt., 

etc. 

ment,  shall  obtain  the  certificate  of  the  superintendent  of 
banks  for  the  opening  of  each  of  the  departments  speci- 
fied. Each  certificate  herein  provided  for  shall  be  given 
when  the  superintendent  shall,  by  the  examination  re- 
quired by  this  act,  have  satisfied  himself  that  the  proper 
amount  of  cash  has  been  paid  in  as  capital  and  the  pro- 
visions of  this  act  complied  with.  The  applicant  shall 
pay  for  the  certificate  for  each  department  a  fee  of  fifty 
dollars. 

Section    25.      Every  bank  shall  maintain  for  each  de-  Bank  to  maintain 

,  ,    .  1  •        1    separate,  specified 

partment  total  reserves  equal  m  amount  to  that  required  total  reserves. 

by   this  act   for   the   respective   business   conducted,    and 

shall  keep  separate  and  distinct  the  total  reserves  of  any 

department  from  that  of  any  other  department;  and  all 

deposits  made  with  other  banks,   w^hether  temporary  or 

otherwise,  shall  be  assets  of  the  respective  departments 

by  which  they  w^ere  made,  and  shall  be  so  carried  on  the 

books  of  such  other  banks,  and  shall  be  repaid  only  upon 

the  order  of  the  department  to  whose  credit  they  stand. 

No  department  shall  receive  deposits  from  any  other  de-  Deposits  by  depart- 

(.       I  .  I  ment  with  other 

partment  or  the  same  corporation;  except  that  a  trust  banks— how  treated. 
department,  in  proper  cases,  may  make  deposits  of  trust 
or  any  other  funds  under  its  control  v/ith  the  savings  de- 
partment of  the  same  corporation  and  may,  upon  order, 
previously  obtained,  of  any  court  having  jurisdiction  of 
any  trust  or  fund,  make  deposits  of  moneys  belonging 
thereto  with  the  commercial  department  of  the  same  cor- 
poration; provided,  however,  that  any  bank  having  de-  Bonds,  etc.,  may  be 

-  i«i  11  1  e  ^°^^  *°^  transferred 

partments  shedl  have  the  right  to  sell  and  transfer  any  from  one  department 

,   ,  to  another. 

bonds,  securities  or  loems  from  one  department  to  another 
upon  receipt  of  the  actual  value  thereof,  if  such  bonds, 

1431 


§  26-28  BLYTH,  WITTER  &   CO. 

securities  or  loans  are,  under  the  provisions  of  this  act, 
a  legal  investment  for  the  depeu'tment  purchasing  the 
same. 

SstpafatTbooks  Section  26.  Every  bank  having  different  departments 
^"'^ro^^is^ionrof  Act!  ^^^^^  ^^^P  separate  books  of  account  for  each  depart- 
ment of  its  business,  and  shall  be  governed  as  to  all  de- 
posits, reserves,  investments  and  transactions  relating  to 
each  department  by  the  provisions  of  this  act  specifically 
provided  for  the  respective  kind  of  business. 

It  shall  keep  all  investments  relating  to  the  savings 
department  entirely  separate  and  apart  from  the  invest- 
ments of  its  other  department  or  departments. 

Every  bank  shall  conduct  the  business  of  all  its  depart- 
ments in  one  building,  or  in  adjoining  buildings,  and  shall 
Mingling  of  cash,  keep  entirely  separate  and  apart  in  each  department  the 

securities,  etc.,  for- 
bidden, cash,   securities  and   property  belonging  to   such   depart- 
ment, and  shall  not  mingle  the  cash,  securities  and  prop- 
erty of  one  department  with  that  of  another. 

Moneys  and  assets       Section    27.     All  moncy  and  assets  belonging  to  each 

of  each  department  =      = 

held  for  repayment  department,  whether  on  hand  or  with  other  banks,  and 

of  its  depositors, 

etc.  the  investments  made,  shall  be  held  solely  for  the  repay- 
ment of  the  depositors  and  other  claimants  of  each  such 
department,  as  herein  provided,  until  all  depositors  and 
other  claimants  of  each  such  department  shall  have  been 
paid,  and  the  overplus  then  remaining  shall  be  applied 
to  any  other  liabilities  of  such  bank. 

Every  hank  must  on       Section    28.      Every  bank  in  this  state  must,  on  all  its 

signs,  advertising,  ■^ 

etc.,  specify  its  window  signs  and  in  advertising,  and  on  letterheads  and 

business —   savings,  °  ° 

"trust"  or  "commer-  other  Stationery  on  which  its  business  is  transacted,   use 

cial.  "^ 

the  word   "savings'*   if  it  conducts  a  savings  business,   or 

the  word   "trust"  if  it  conducts  a  trust  business,   and  the 

word  "commerciar'  if  it  conducts  a  commercial  business. 

^'^*"„',!'iJ'/,J?^,r"  Every  bank  which  maintains  a  branch  office,  must  on  all 

quirements.  ""  ' 

window  signs  and  in  advertising,  and  on  letterheads  and 
other  stationery   on   which   the  business   of   said   branch 

144] 


GENERAL  PROVISIONS  §  28-29 

office  is  transacted,  use  in  letters  and  type,  equal  in 
prominence  to  that  used  in  its  corporate  name,  the  word 
"branch"  and  the  name  of  the  place  where  its  principal 
business  is  located. 

[Note  by  Publishers,  re  Section  28: 

The  purpose  of  this  section,  amended  in  1917,  dealing  with  the  matter  of  how 
branch  offices  shall  present  their  relationship  to  the  public,  is  that  there  shall  be 
no  possible  confusion  as  to  the  identity  of  a  branch  office  as  such,  or  suppression 
of  the  fact  that  it  is  a  branch  and  not  a  principal  place  of  business.] 

Section   29.       Every    corporation    heretofore    created  Bank  without  capi- 

.  ii'i-  *^^  stock  may  convert 

under  the  law^s  of  this  state,  doing  a  banking  business  into  stock  company. 
therein,  and  which  has  no  capital  stock,  may  elect  to 
have  a  capital  stock,  and  may  issue  certificates  of  stock 
therefor,  in  the  same  manner  as  corporations  formed 
under  the  provisions  of  Part  IV,  Title  I,  Chapter  I,  Article 
I,  of  the  Civil  Code,  relating  to  the  formation  of  corpora- 
tions; provided,  that  no  such  corporation  shall  use  or 
convert  any  moneys  or  funds  theretofore  belonging  to  it, 
or  under  its  control,  into  capital  stock;  but  such  funds  or 
moneys  must  be  held  and  managed  only  for  the  purposes 
and  in  the  manner  for  which  they  were  created.      Before  Prerequisites  to 

such  conversion. 

such  change  is  made,  a  majority  of  the  members  of  such 

corporation  present  at  a  meeting  called  for  the  purpose  of 

considering  the  proposition  whether  it  is  best  to  have  a 

capital  stock,  its  amount,  and  the  number  of  shares  into 

which  it  shall  be  divided,  must  vote  in  favor  of  having 

a  capital  stock,  fix  the  amount  thereof,  and  the  number 

of  shares  into  which  it  shall  be  divided.      Notice  of  the 

time  and  place  of  holding  such  meeting,  and  its  object, 

must  be  given  by  the  president  of  such  corporation  by 

mailing  notice  of  such  meeting  to  each  member  of  such 

corporation  at  his  last  know^n  post-office  address  at  least 

ten  days  prior  to  the  day  fixed  for  such  meeting,  and  by 

publication  in  some  newspaper  printed  and  published  in 

the  county,    or  city  and  county,   in  which   the  principal 

place  of  business  of  the  corporation  is  situated,  at  least 

once  a  week  for  three  successive  weeks  prior  to  the  hold-  proceedings!''et°c^.. 

ing  of  the  meeting.      A  copy  of  the  proceedings  of  this  'r°etar/of  sute  fnd' 

meeting,  giving  the  number  of  persons  present,  the  votes  county  clerk. 

[45] 


§29-31  BLYTH,  WITTER  &  CO. 

taken,  the  notice  calling  the  meeting,  the  proof  of  its 
publication,  the  amount  of  capital  actually  subscribed, 
and  by  whom,  all  duly  certified  by  the  president  and 
secretary  of  the  corporation,  must  be  filed  in  the  office  of 
the  secretary  of  state  and  clerk  of  the  county  where  the 
Effect  of  procee^d-  articles  of  incorporation  are  filed.  Thereafter  such  cor- 
poration is  possessed  of  all  the  rights  and  powers,  and 
is  subject  to  all  the  obligations,  restrictions,  and  limita- 
tions, as  if  it  had  been  originally  created  with  a  capital 
stock. 

Safe  deposit  de-       Section    30.      Any  bank  may  conduct  a  safe  deposit 

partment.  •'  •'  ^ 

department,  but  shall  not  invest  more  than  one-tenth  of 
its  capital  and  surplus  in  such  safe  deposit  department. 

Business  of  bank       Section    31.      Any   bank   may    sell    the    whole    of   its 

or  of  department  ''  "^ 

may  be  sold  to  business  or  the  whole  of  the  business  of  any  of  its  de- 

other  bank.  "^ 

partments  to  any  other  bank  which  may  purchase  such 
business  after  obtaining  the  consent  of  the  stockholders 
of  the  selling  and  of  the  purchasing  banks  holding  of 
record  at  least  two-thirds  of  the  issued  capital  stock  of 
each  of  such  corporations;  such  consent  to  be  expressed 
either  in  writing  executed  and  acknowledged  by  such 
stockholders  and  attached  to  the  instrument  of  sale,  or  to 
a  copy  thereof,  or  by  vote  at  a  stockholders'  meeting  of 
Banks  must  enter  each  of  such  banks  Called  for  that  purpose.      The  selling 

into  agreement  of  *         »  a 

sale  containing:  and  purchasing  banks  must  for  such  purposes  enter  into 

specified  provisions.  »  w. 

an  agreement  of  sale  and  purchase,  which  agreement 
shall  contain  all  the  terms  and  conditions  connected  with 
such  sale  and  purchase.  Such  agreement  shall  contain 
proper  provision  for  the  payment  of  liabilities  of  the 
selling  bank  or  of  the  department  sold,  and  in  this  par- 
ticular shall  be  subject  to  the  approval  of  the  superin- 
tendent of  banks;  and  shall  not  be  valid  until  such  ap- 
proval is  obtained.  Such  agreement  may  contain  pro- 
visions for  the  transfer  of  all  deposits  to  the  purchasing 
bank,  subject,  however,  to  the  right  of  every  depositor 
of  the  selling  bank  to  withdraw  his  deposit  in  full  on  de- 

[46] 


GENERAL  PROVISIONS  §  3  1 

mand  after  such  transfer,  irrespective  of  the  terms  under 
which  it  was  deposited  with  the  selling  bank.  The  rights 
of  creditors  of  the  selling  bank  shall  not  in  any  manner 
be  impaired  by  any  such  sale,  nor  shall  any  liability  or 
obligation  for  the  payment  of  any  money  due  or  to  be- 
come due,  or  any  claim  or  demand,  in  any  manner,  or 
for  any  cause  existing  against  such  selling  bank  or  against 
any  stockholder  thereof,  be  in  any  manner  released  or 
impaired,  and  all  the  rights,  obligations  and  relations  of 
all  the  parties,  creditors,  depositors,  trustees  and  bene- 
ficiaries of  trusts  shall  remain  unimpaired  by  the  sale,  but 
such  bank  to  which  the  other  shall  sell  all  its  business  or  purchasing  bank 
all  the  business  of  any  of  its  departments,  shall  succeeed  anTobifgatioM  of 
to  all  such  relations,  obligations,  trusts  and  liabilities  and  ^^  '"^ 
be  held  liable  to  pay  and  discharge  all  such  debts  and  lia- 
bilities and  to  perform  all  such  trusts  of  the  selling  bank 
in  the  same  manner  as  if  such  bank  to  which  the  other  had 
sold  had  itself  incurred  the  obligation  or  liability  or  as- 
sumed the  relation  of  trust,  and  the  stockholders  of  the  stockholders  remain 

I  liable. 

respective  corporations  so  entering  into  such  agreement 
shall  continue  subject  to  all  the  liabilities,  claims  and  de- 
mands existing  against  them  as  such  at  or  before  such  sale. 
Immediately   after   the   execution    of   such    agreement    of 
sale  and  purchase  notice  thereof  shall  be  published  for  at  Notice  of  sale  to  he 
least  four  successive  weeks  in  a  newspaper  in  each  of  the  ^" 
counties  of  the  state  in  which  either  of  such  banks  shall 
have  its  principal  place  of  business;  provided,  however, 
that  no  action  can  be  brought  against  such  selling  bank  Limitation  of  actions. 
or  any  of  its  stockholders  on  account  of  any  deposits  so 
transferred  after  the  expiration  of  one  year  from  the  last 
day  of  publication  herein  required. 

An  affidavit  showing  such  publication  shall  be  filed  in 
the  office  of  the  superintendent  of  banks  within  ten  days 
after  the  last  publication  thereof.  The  affairs  of  such 
selling  bank,  or  selling  department  of  a  bank,  shall  re- 
main subject  to  the  provisions  of  this  act. 

[47] 


§3  la  BLYTH.  WITTER  &  CO. 

state  banks  may       Section  31a.     Any  bank  incorporated  under  the  laws 

consolidate,  upon  •'  ^ 

approval  of  supt.  Qf  fj^jg  State  mav  consolidate  with   one   or  more  banks 

and  ratification  of 

stockholders  as  incorporated    under    the    laws    of    this    state,    its    capital 

specified. 

stock,  properties,  trusts,  claims,  demands,  contracts, 
agreements,  obligations,  debts,  liabilities  and  assets  of 
every  kind  and  description,  upon  such  terms  and  in  such 
manner  as  may  be  agreed  upon  by  their  respective  boards 
of  directors,  a  copy  of  which  agreement  must  be  filed  in 
the  office  of  the  superintendent  of  banks;  provided,  that 
such  agreement  shall  be  subject  to  the  approval  of  the 
superintendent  of  banks  and  shall  not  be  valid  until  such 
approval  be  obtained;  provided,  further,  that  no  such 
consolidation  shall  take  effect  until  such  agreement  shall 
have  been  ratified  and  confirmed  in  writing  by  the  stock- 
holders of  the  respective  banks  holding  of  record  at  least 
two-thirds  of  the  issued  capital  stock  of  their  respective 
banks,  or  such  agreement  may  be  submitted  to  the  stock- 
holders of  each  of  such  corporations  at  a  meeting  thereof 
to  be  called  upon  notice  specifying  the  time,  place  and 
object  thereof,  addressed  to  each  stockholder  at  his  last 
known  post-office  address  and  deposited  in  the  post- 
office,  postage  prepaid,  at  least  two  weeks  prior  to  the 
date  fixed  for  said  meeting,  and  published  for  at  least 
two  successive  weeks,  prior  to  the  date  of  said  meeting, 
in  a  newspaper  in  each  of  the  counties  of  the  state  in 
which  any  of  such  banks  shall  have  its  principal  place  of 
business,  and  if  such  agreement  shall  be  approved  at 
each  of  such  meetings  of  the  respective  stockholders 
separately  by  the  vote  or  ballot  of  the  stockholders  own- 
ing at  least  two-thirds  of  the  stock  of  each  such  bank, 
the  same  shall  be  the  agreement  of  such  banks.  In  case 
of  such  consolidation  "articles  of  incorporation  and  con- 
solidation" must  be  prepared,  setting  forth: 

Contents  of  article*:        pjrgt — The  name  of  the  new  corporation; 

consolidation. 

Second — ^The  purpose  for  which  it  is  formed; 

[48] 


GENERAL  PROVISIONS  §31. 

Third — The  place  where  its  principal  business  is  to  be 
transacted ; 

Fourth — The  term  for  which  it  is  to  exist,  which  shall 
not  exceed  fifty  years; 

Fifth — The  number  of  its  directors  (which  shall  not 
be  less  than  three)  and  the  names  and  residences  of  the 
persons  appointed  to  act  as  such  until  their  successors  are 
elected  and  qualified; 

Sixth — The  amount  of  its  capital  stock  and  the  num- 
ber of  shares  into  which  it  is  divided; 

Seventh — The  amount  of  stock  actually  subscribed, 
and  by  whom; 

Eighth — The  names  of  the  constituent  corporations. 

Said  articles  of  incorporation  and  consolidation  must  Articles  to  be  exe- 

,.,,  -Ill  •!  1  cuted  as  specified. 

be  signed  and  countersigned  by  the  president  and  secre- 
tary of  each  constituent  corporation  and  sealed  with 
their  corporate  seals.  There  must  be  annexed  thereto 
the  approval  of  the  superintendent  of  banks  and  memo- 
randa of  the  ratification  and  confirmation  thereof  by  the 
stockholders  of  each  constituent  corporation,  which  must 
be  respectively  signed  and  acknowledged  by  stockholders 
representing  at  least  two-thirds  of  the  capital  stock  of 
their  respective  corporations.  When  completed  as  afore-  Articles  with  whom 
said  said  articles  must  be  filed  in  the  office  of  the  county  *°  ®  ^^' 
clerk  of  the  county  in  which  is  located  the  principal  place 
of  business  of  the  new  corporation,  and  a  copy  of  the 
articles  of  incorporation  and  consolidation  certified  by 
such  county  clerk  must  be  filed  in  the  office  of  the  secre- 
tary of  state,  who  must  issue,  over  the  great  seal  of  the 
state,  a  certificate  that  a  copy  of  the  articles  of  in- 
corporation and  consolidation  containing  the  required 
statement  of  facts  has  been  filed  in  his  office.  The  secre- 
tary of  state  must  file  in  his  office  a  duplicate  of  the 
certificate  hereinbefore  provided  for  and  copies  thereof, 

[49] 


§3la  BLYTH,  WITTER  &   CO. 

duly  certified  by  the  secretary  of  state,  shall  have  the 
same  force  and  effect  in  evidence  as  the  original.  A 
copy  of  the  articles  of  incorporation  and  consolidation, 
certified  by  said  secretary  of  state,  must  be  filed  in  the 
office  of  the  superintendent  of  banks,  and  also  in  the 
office  of  the  county  clerk  of  any  county  in  which  were 
filed  the  original  articles  of  incorporation  of  either  of  the 
Effect  of  Supt.  issu-  Constituent   corporations.      When    the   superintendent   of 

ing  certificate,  ii.  i  .n  c  y         •  •  -iir 

banks  issues  the  certihcate  or  authorization  provided  for 
by  section  one  hundred  twenty-eight  of  this  act  the  new 
or  consolidated  corporation  shall  be  a  body  politic  and 
corporate  by  the  name  stated  in  the  certificate,  and  for 
the  term  of  fifty  years,  unless  it  is,  in  the  articles  of  in- 
corporation and  consolidation,  otherw^ise  stated  and 
thereupon  each  constituent  corporation  named  in  the 
articles  of  incorporation  and  consolidation  must  be 
deemed  and  held  to  have  become  extinct  in  all  courts 
and  places,  and  said  new  corporation  must  be  deemed 
and  held  in  all  courts  and  places  to  have  succeeded  to  all 
their  several  capital  stocks,  properties,  trusts,  claims,  de- 
mands, contracts,  agreements,  assets,  choses  and  rights 
in  action  of  every  kind  and  description,  both  at  law  and 
in  equity,  and  to  be  entitled  to  possess,  enjoy,  and  en- 
force the  same  and  every  thereof,  as  fully  and  completely 
as  either  and  every  of  its  constituents  might  have  done 
had  no  consolidation  taken  place.  Said  consolidated  or 
new^  corporation  must  also,  in  all  courts  and  places,  be 
deemed  and  held  to  have  become  subrogated  to  its  sev- 
eral constituents  and  each  thereof,  in  respect  to  all  their 
contracts  and  agreements  with  other  parties,  and  all  their 
debts,  obligations,  and  liabilities,  of  every  kind  and 
nature,  to  any  persons,  corporations,  or  bodies  politic, 
whomsoever,  or  whatsoever,  and  said  new^  corporation 
must  sue  and  be  sued  in  its  own  name  in  any  and  every 
case  in  which  any  or  either  of  its  constituents  might  have 
sued  or  might  have  been  sued  at  law  or  in  equity  had  no 
such  consolidation  been  made.      Nothing  in  this  section 

[501 


GENERAL  PROVISIONS §  31 

contained  shall  be  construed  to  impair  the  obligation  of 
any  contract  to  which  any  of  such  constituents  were  par- 
ties at  the  date  of  such  consolidation.  All  such  contracts 
may  be  enforced  by  action  or  suit,  as  the  case  may  be, 
against  the  consolidated  corporation,  and  satisfaction  ob- 
tained out  of  the  property  which,  at  the  date  of  the  con- 
solidation, belonged  to  the  constituent  which  was  a  party 
to  the  contract  in  action  or  suit,  as  well  as  out  of  any  other 
property  belonging  to  the  consolidated  corporation,  and 
the  stockholders  of  each  constituent  corporation  so  enter- 
ing into  such  agreement  shall  continue  subject  to  all  the 
liabilities,  claims  and  demands  existing  against  them  at 
or  before  such  consolidation  to  the  same  extent  as  if  the 
same  had  not  been  made.      The  right  of  said  new  cor-  T,„u.„f„„„^„ 

="  Right  of  new  cor- 

poration   to    increase    or    decrease    its    capital    stock,    to  potation  to  effect 

^  '^  organic  changes. 

change  the  number  of  its  directors,  to  amend  its  articles 
of  incorporation,  to  change  its  principal  place  of  business, 
or  its  name,  or  to  effect  any  other  organic  change  shall 
be  governed  by  the  general  corporation  laws  of  this  state 
and  by  the  bank  act,  and  the  procedure  to  effect  any 
such  change  shall  be  that  defined  by  the  general  corpora- 
tion laws  and  the  bank  act. 

The  superintendent  of  banks  shall  transmit  to  the  sec-  Supt.  to  transmit  to 

-  ...  .     ,  .  _  r  I         •  Secy,  of  State  dup- 

retary  of  state  a  duplicate  or  trie  certificate  or  autrioriza-  iicate  of  certificate. 
tion  hereinbefore  referred  to  and  the  secretary  of  state 
shall  file  the  same  in  his  office.      The  superintendent  of 
banks  shall  also  file  a  duplicate  of  such  certificate  in  his 
own  office. 

[Note  by  Publishers,  re  Section  31a,  amended  in  1917,  dealing  with  the 
creation  of   corporations  through  merging: 

Under  the  provisions  of  the  Act  as  they  previously  stood,  there  was  an  interim 
between  the  time  of  completion  of  the  organization  and  the  time  at  which  the 
merged  corporation  might  receive  its  certificate  from  the  Superintendent  of 
Banks.  Under  the  general  law  governing  corporations,  a  corporation  is  formed, 
completely  equipped  to  perform  its  service,  in  the  office  of  the  Secretary  of  State; 
but  a  merged  banking  corporation,  being  composed  of  two  or  more  constituent 
corporations,  could  not  effectively  be  completed  at  that  point,  because  upon 
merger  the  two  constituent  corporations  disappear,  and  the  new  corporation 
can  not  receive  a  certificate  from  the  Superintendent  of  Banks  until  the  new 
corporation  is  completed.  This  amendment  makes  it  plain  that  the  organiza- 
tion of  the  new  corporation  is  not  complete  until  the  certified  articles  of 
incorporation  are  filed  with  the  Superintendent  of  Banks  and  his  certificate  issued, 
so  that  there  shall  be  no  interim  between  the  forming  of  the  new  and  the  expir- 
ing of  an  old  corporation.] 

[511 


f  32-36      BLYTH.  WITTER  &   CO. 

Bank  not  to  mingle       Scction  32.     Anv  bank  receiving  trust  funds  in  accord- 
trust  funds  with 

other  assets,  ance  with  the  provisions  of  this  act  relating  to  trust  com- 
panies must  not  mingle  such  trust  funds  with  the  other 
assets  of  the  corporation,  except  as  otherwise  provided 
in  section  twenty-five  of  this  act,  and  such  funds  shall  not 
be  carried  or  counted  as  any  part  of  the  total  reserves 
Violation  of  pro-  provided  for  in  this  act.      The  officers  of  any  bank  who 

vision,  felony.  •       i  •    i  i  •    i       •  r     i   • 

knowmgly  violate  or  consent  to  the  violation  or  this  pro- 
vision shall  be  guilty  of  a  felony. 

(Section    33.      Repealed   1913.) 

Ko  bank  to  purchase,       Section  34.     No  bank  shall  purchase  or  invest  its  capi- 

invest  or  lend  upon 

its  capital  stock,  tal  Or  surplus  Or  money  of  its  depositors,  or  any  part  of 

unless  to  prevent  _  _  ' 

loss  on  debt,  either,  in  shares  of  its  own  capital  stock;  nor  loan  its 
capital  or  surplus  or  money  of  its  depositors,  or  any  part 
of  either,  on  shares  of  its  own  capital  stock,  unless  such 
purchase  or  loan  shall  be  necessary  to  prevent  loss  to 
such  bank  on  debts  previously  contracted  in  good  faith. 
Penalty.  Every  person  or  corporation  violating  any  provision  of 
this  section  shall  forfeit  to  the  people  of  the  state  twice 
the  nominal  amount  of  such  stock. 

Limitations  upon       Section  35.     No  bank  shall  purchase  any  contract  aris- 

purchase  of  realty 

note  or  bond  by  in-  Jng  from  the  Sale  of  real  estate  or  any  note  or  bond  in 

terested  officers,  etc. 

which  contract,  or  note,  or  bond  any  director,  officer, 
employee,  or  controlling  stockholder  of  such  bank  is 
personally  or  financially  interested,  directly  or  indirectly, 
for  his  own  account,  for  himself,  or  as  the  partner  or 
agent  of  others,  without  the  previous  consent  in  writing 
of  the  superintendent  of  banks. 

Commercial  bank       Sectlon  36.      No  Commercial  bank  receiving  deposits 

receiving  deposits  i      ii  i  i 

not  to  purchase  bond  of  moncy  shall  purchasc  or  agree  to  purchase  any  bond 

issue  in  excess  of   ,  ,  c    r  r    ' 

5%  of  assets,  except  issue  ui  cxccss  of  fivc  per  centum  of  its  assets,  except 
bonds  of  the  United  States,  of  the  State  of  California,  of 
the  counties,  cities  and  counties,  cities  or  school  districts 
of  this  state,  or  bonds  of  any  irrigation  district  such  as  are 
legal  for  investment  by  savings  banks. 

[521 


GENERAL  PROVISIONS  §  37 

Section  37.      No  bank  shall,  except  as  otherwise  pro-  Restriction  on  pm-- 

"^  ^  chasing  or  investing 

vided  in  this  act,  purchase  or  invest  its  capital  or  surplus  '°  capital  stock  of 

'^  _  _  any  corporation. 

or  money  of  its  depositors,  or  any  part  of  either,  in  the 
capital  stock  of  any  corporation  unless  the  purchase  or 
acquisition  of  such  capital  stock  shall  be  necessary  to  pre- 
vent loss  to  the  bank  on  an  obligation  owned  or  on  a 
debt  previously  contracted  in  good  faith.      Any  capital  Capital  stock  so 

•11111  111  1      purchased  to  be  sold. 

stock  so  purchased  or  acquired  shall  be  sold  by  such 
bank  within  six  months  thereafter  if  it  can  be  sold  for 
the  amount  of  the  claim  of  such  bank  against  it;  and  all 
capital  stock  thus  purchased  or  acquired  must  be  sold  for 
the  best  price  obtainable  by  said  bank  within  three  years 
after  such  purchase  or  acquisition  unless  the  superintend- 
ent of  banks  shall  extend  the  time  of  its  sale  for  a  period 
not  to  exceed  tw^o  years. 

Any  bank,   with   the  previous  written  consent   of  the  Bank  after  consent  of 

.     ^         ,        .        r   1  1  I  .1  •  Supt.,  may  acquire 

superintendent  or  banks,  may  purchase  or  otherwise  ac-  capital  stock  of  one 
quire  and  hold  the  whole  or  any  part  of  the  capital  stock  company. 
of  not  more  than  one  trust  company  organized  and  exist- 
ing under  the  laws  of  this  state,  and  doing  business  in  the 
same  city  in  which  the  principal  place  of  business  of  such 
bank  is  located;  provided,  however,  that  not  more  than  Limitation  on  such 
an  amount  equal  to  twenty-five  per  centum  of  the  capital  ^""^^ 
and  surplus  of  any  such  bank  may  be  at  any  one  time 
invested   in  the   capital  stock   of  such   trust   company   or 
such  other  corporation;  and  provided,   further,    that  no 
such  trust  company  shall  engage  in  or  combine  the  busi- 
ness of  a  commercial  bank  or  a  savings  bank  or  a  title 
insurance  company. 

Any  bank,   with   the  previous  written  consent  of  the  Bank,  with  consent 

-  .     ,  ,  ,  ,  .         of   Supt.,    may   pur- 

superintendent    or    banks,    may    purchase    or    otherwise  chase,  etc.,  stock  of 

,,,,,  ,.  (■      ,  .•   one   safe-deposit   cor- 

acquire  and  hold,   the  whole  or  any  part  or  the  capital  poration  in  same  city. 
stock  of  not  more  than  one  corporation  authorized  and 
empowered    to    conduct   a    safe   deposit   business,    which 
such  corporation  is  organized  and  existing  under  the  laws 
of  this  state  and  doing  business  in  the  same  city  in  which 

[53] 


§  37-38  BLYTH.  WITTER  &  CO. 

the  principal  place  of  business  of  such  bank  is  located; 
Limitatum  on^such  provided,  however,  that  not  more  than  an  amount  equal 
to  ten  per  centum  of  the  capital  and  surplus  of  any  such 
bank  may  be  at  any  one  time  invested  in  the  capital  stock 
of  such  safe  deposit  corporation. 

[Note  by  Publishers,  re  Section  37,   amended   1919: 

This  amendment  affects  Section  37  in  two  vital  relationships:  First,  the 
amendment  permits  any  bank,  with  the  previous  written  consent  of  the  Superin- 
tendent of  Banks,  to  purchase  or  otherwise  acquire  and  hold  the  whole  or  any  part 
of  the  capital  stock  of  not  more  than  one  trust  company  organized  and  existing: 
under  the  laws  of  this  State,  if  that  purchase  shall  not  exceed  25  per  cent,  of 
the  capital  and  surplus  of  any  such  bank,  and  also  permits  any  bank,  with  the  previ- 
ous consent  of  the  Superintendent  of  Banks,  to  purchase  the  whole  or  any  part  of 
the  capital  stock  of  not  more  than  one  corporation  authorized  and  empowered  to 
conduct  a  safe  deposit  business.  The  first  change  is  intended  to  permit  a  strength- 
ening of  the  trust  companies  in  this  State  and  also  to  indulge  smaller  banks  in  a 
desire  to  participate  in  the  profits  of  those  companies;  and  the  second  is  an  inci- 
dent necessary  and  familiar  in  the  conduct  of  the  banking  business,  but  which 
may  not  be  within  the  reach  of  the  smaller  capitalized  institutions.  Care  is 
taken,  however,  to  prevent  any  commercial  or  savings  bank  from  engaging  in  a 
title  insurance  company  business.  The  amendment  is  a  desirable  one  because 
of  its  concentration  of  banking  energy  and  for  the  permission  granted  to  smaller 
institutions  to  participate  in  the  prosperity  which  follows  the  operations  of  larger 
corporations.] 

Director,  agent,  etc.,        Section  38.     A  director,  officer,  agent  or  employee  of 

of  bank  making  or 

concurring  in  false   any  bank   who, 
entry  or  report,  or  in 

omitting  to  make  ly-  •        i  •  i   •  ir       r 

full  and  true  entries,        t  irst — K.nowingly  receives  or  possesses  himself  of  any 

etc.,  guilty  of  felony.        .    .  i  •  i  •  r  •  i 

of  its  property  otherwise  than  m  payment  ror  a  just  de- 
mand, and  with  intent  to  defraud,  omits  to  make  or  to 
cause  or  direct  to  be  made  a  full  and  true  entry  thereof 
in  its  books  and  accounts;  or. 

Second — Concurs  in  omitting  to  make  any  material 
entry  thereof;  or. 

Third — Knowingly  concurs  in  making  or  publishing 
any  written  report,  exhibit  or  statement  of  its  affairs  or 
pecuniary  condition  containing  any  material  statement 
which  is  false;  or, 

Fourth — Having  the  custody  or  control  of  its  books, 
wilfully  refuses  or  neglects  to  make  any  proper  entry  in 
the  books  of  such  corporation  as  required  by  law,  or  to 
exhibit  or  allow  the  same  to  be  inspected  and  extracts 
to  be  taken  therefrom  by  the  superintendent  of  banks, 
his  chief  deputy  or  any  of  his  examiners,  shall  be  guilty 
of  a  felony. 

[541 


GENERAL  PROVISIONS  §39-41 

Section   39.      Any  officer,   director,  agent,   teller,   clerk  Bank  director  or  em- 

,  I  ,  .   ,  ployee  overdrawing 

or  employee  or  any  bank  who  either,  accounts  or  receiving 

commissions  on  loan 

First — Knowingly  overdraws  his  account  with  such 
bank,  and  thereby  obtains  the  money,  notes  or  funds  of 
any  such  bank;  or 

Second — Asks  or  receives  or  consents  or  agrees  to 
receive  any  commission,  emolument,  gratuity  or  reward, 
or  any  money,  property  or  thing  of  value,  for  his  own 
personal  benefit,  or  of  personal  advantage,  for  procur- 
ing or  endeavoring  to  procure  for  any  person,  firm  or 
corporation  any  loan  from,  or  the  purchase  or  discount 
of  any  paper,  note,  draft,  check  or  bill  of  exchange,  by 
such  bank,  or  for  permitting  any  person,  firm  or  cor- 
poration to  overdraw  any  account  with  such  bank,  is 
guilty  of  a  felony. 

Section  40.     No  bank  mentioned  in  this  act  shall  make  Contract  of  bank  to 

.  ,  111         waive  stockholder's 

any    contract   w^ith    any    of    its    depositors    w^hereby    the  liability,  void. 
stockholders'  liability  provided  for  by  the  constitution  of 
this  state  is  in  any  manner  waived,  and  if  any  such  con- 
tract shall  be  so  made,  such  contract  shall  be  void. 

Section  4  1 .      No  officer,  director,  agent    or  other  em-  ^°  ''^"^  o^-^".  di- 

rector,  employee, 

ployee  of  any  bank  shall  directly  or  indirectly,    for  his  etc.,  to  purchase  or 

be  interested  in  pur- 

own  personal  benefit,   purchase,   or  be  interested  in  the  ^^^^^  °^  banks  ob- 

_  ligations  or  assets 

purchase  of  any  of  such  bank  s  obligations  or  assets  for  under  face  value. 

a  less  sum  than  shall  appear  upon  the  face  of  any  such 

obligations  or  assets  to  be  the  value  thereof  except  with 

the  previous   consent   of  all   the  directors   of   said   bank, 

such  consent  to  be  evidenced  by  a  resolution  adopted  by 

said  directors.      A  certified  copy  of  said  resolution  shall 

immediately    be    transmitted    to    the    superintendent    of 

banks.       Every    person    violating    any    provision    of    this  Penalty. 

section,  shall  for  each  offense  forfeit  to  the  people  of  the 

state,    twice    the    face   value   of   any   such    obligations    or 

assets  so  purchased. 

[Note  by  Publishers,  re  Section  41,   amended  1917: 

Under  the  law  as  it  stood  previous  to  1917,  even  though  a  bank  asset  might 
not  be  worth,   and  might  well  be  known  not  to  be   worth,   more  than  50  per  cent. 

1551 


§  42-44  BLYTH,  WITTER  &  CO. 

of,  or  less  than,  its  value  appearing  on  its  face,  nevertheless  it  could  not  be 
transferred  to  or  purchased  by  anybody  interested  as  a  stockholder,  for  less  than 
its  full  worth.  The  amendment  has  made  such  a  transaction  possible,  upon  obtain- 
ing consent  of  the  directors  as  indicated.] 

Section  42.  No  officer,  director,  agent  or  other  em- 
ployee of  any  bank,  shall  directly  or  indirectly,  for  his 
own  personal  benefit,  purchase,  or  be  interested  in  the 
purchase  of  any  of  the  assets  of  said  bank  for  a  less  sum 
Penalty,  j-j^^n  the  current  market  value  thereof.  Every  person 
violating  any  provision  of  this  section,  shall  for  each 
offense,  forfeit  to  the  people  of  the  state,  twice  the  nomi- 
nal amount  of  any  such  assets  so  purchased. 

No  bank  to  deii^sH        Section   43.      No  bank  shall   deposit  any  of  its  funds 

funds  in  other  bank 

except  Federal  Re-  in  any  Other  bank,  except  a  federal  reserve  bank,  unless 

serve  bank,  unless 

as  specified,  such  Other  bank  has  been  nominated  as  a  depositary  for 
its  funds  by  the  vote  of  a  majority  of  the  directors  or 
trustees  of  the  bank  making  the  deposit,  and  such  other 
bank  has  been  designated  by  the  superintendent  of  banks 
as  such  depositary. 

The  superintendent  of  banks  may  in  his  discretion  re- 
voke such  a  designation. 

[Note  by  Publishers,   re   Section  43,    amended   1919: 

The  only  change  in  the  section  as  it  stood  previous  to  the  amendment  is  the 
insertion  of  the  phrase,  "excepting  a  federal  reserve  bank."  This  amendment  is 
a  minor  one,  designed  simply  to  except  a  Federal  Reserve  bank  from  the  neces- 
sity of  being  either  nominated  or  designated  by  the  Superintendent  of  Banks  as 
a  reserve  depositary  for  funds  of  any  bank  in  the  State  system.  It  is  assumed 
that  the  Federal  Reserve  hank  of  the  district  in  which  any  of  the  banks  of 
California  may  be  located  does  not  require  such  a  designation  as  is  demanded 
for   other  banking  institutions.] 

Limitation  and  re-        Section    44.       No    bank    shall    hereafter   make    a    loan 

gtrictions  upon  loan 

secured  by  stock  of  secured  by  the  stock  of  another  bank,  if  by  making  such 
loan  the  total  stock  of  such  other  bank  held  by  such  loan- 
ing bank  as  collateral  will  exceed  in  the  aggregate  twenty- 
five  per  centum  of  the  capital  stock  of  such  other  bank; 
provided,  that  no  loan  upon  the  capital  stock  of  any  bank 
shall  be  made  unless  such  bank  has  been  in  existence  at 
least  two  years  and  has  earned  and  paid  a  dividend  upon 
its  capital  stock;  and  provided,  further,  that  no  bank 
may  loan  more  than  five  per  centum  of  its  assets  upon  the 
capital  stock  of  any  corporation  whatsoever  as  collateral 
security. 

[56] 


another  bank. 


GENERAL  PROVISIONS  §  45-47 

Section    45.     Interest  unpaid,  although  due  or  accrued.  Y"p^''!. '"'^"!^*  "°* 

^  =  "v,v^,    jjggjned  profits  pre- 

on  debts   owing  to   any  bank,    shall   not  be   included   in  ^°^^  *"  dividend. 

calculation  of  its  profits  previous  to  a  dividend;  nor  shall 

any  bank,  except  with  the  previous  written  consent  of  the  ^°  valuation  of  as- 
sets above  cost 

superintendent  of  banks,  enter  or  at  any  time  carry  on  its  without  consent  of 
books  any  of  its  assets  at  a  valuation  exceeding  its  actual 
cost  to  such  bank. 

[Publisher's  Note:  This  section  as  it  now  stands  was  amended  in  1917,  by 
the  addition,  after  the  first  clause,  ending  with  the  word  "dividend"  of  the  clause 
forbidding  book  valuation  of  assets  exceeding  actual  cost,  without  consent  of  the 
Superintendent  of  Banks.  Under  the  law  as  it  stood  prior  to  1917,  the  writing 
up  of  any  of  the  assets  of  a  bank  was  legally  impossible.  Sometimes  it  occurs 
that  there  is  a  very  material  increase  in  the  value  of  certain  assets,  and  some- 
times it  is  desirable,  and  it  should  be  permitted,  that  assets  be  written  up;  but 
it  is  not  desirable,  of  course,  that  that  could  be  done  under  any  and  all  circum- 
stances. This  amendment  was  designed  to  permit  such  writing  up  whenever  it  is 
advisable  that  it  should  be  done,  and  of  course,  will  prohibit  the  process  when  it 
should  not  be  allowed.] 

Section  46.     No  commercicJ  bank  shall  Invest  or  loan  ^o  bank  to  loan  or 

invest   more   than   5% 

more  than  five  per  centum  of  its  assets  in  any  one  bond  of  assets  in  any  one 

bond  issue,   except 

issue,  except  bonds  of  the  United  States,  of  the  State  of  governmental  bonds, 

as  specified. 

California,  of  the  counties,  cities  and  counties,  cities  or 
school  districts  of  this  state,  or  bonds  of  any  irrigation 
district  such  as  are  legal  for  investment  by  savings  banks. 

Section  47.     No  commercial  bank  shall,  except  for  the  No  commercial  bank, 

•^  except  to  facilitate 

purpose  of  facilitating  the  sale  of  property  owned  by  the  ^^le  of  property 

^       '^  .  owned  to  make  loan 

bank,  make  any  loan  on  the  security  of  real  estate,  unless  °"  ""^ai  estate,  un- 
less first  lien  and 

it  is  a  first  lien  and  is  either  for  specified  period 

and  per  centum  of 

(  I )  Made  for  a  period  of  time  not  exceeding  six 
months  and  upon  security  worth  at  least  fifteen  per 
centum  more  than  the  amount  loaned;  or 

(2)  Made  for  a  period  of  time  exceeding  six  months 
and  not  exceeding  ten  years  and  does  not  exceed  sixty 
per  centum  of  the  market  value  of  the  real  estate  taken  as 
security. 

No  commercial  bank  shall  loan  in  the  aggregate  more 
than  thirty-five  per  centum  of  its  assets  on  real  estate 
loans  of  the  character  specified  in  subdivision  two  of  this  gages'and  d^ds  of 
section.  These  provisions,  however,  shall  not  prevent 
any  bank  from  taking  another  and  immediately  subse- 

[57] 


trust. 


§  47-48a  BLYTH.  WITTER  &  CO. 

quent  mortgage  or  deed  of  trust  thereon  when  it  already 
holds  a  first  mortgage  or  deed  of  trust  on  such  real 
estate,  nor  from  accepting  a  second  lien  on  real  estate 
to  secure  the  repayment  of  a  debt  previously  contracted 
in  good  faith;  nor  shall  it  prevent  subsequent  liens  of  any 
kind  from  being  taken  to  secure  the  payment  of  a  debt 
previously  contracted  in  good  faith  when,  in  the  judg- 
ment of  the  directors  of  such  bank,  such  subsequent  liens 
are  necessary  further  to  secure  the  payment  of  any  debts 
and  save  such  bank  from  loss. 

National  bank  other        ScctioH   48.      Any  national  bank,   in  this  state,    other 

than  Federal  Reserve 

bank  receiving  State  than  a  federal  reservc  bank,  receiving  the  deposits  of  any 

bank  deposits,  must, 

at  request  of  supt.,  bank  Organized  and   conducting  business  under  this  act, 

submit  to  examina- 

tion.  must,  at  the  request  of  the  superintendent  of  banks,  sub- 
mit to  an  examination  by  him,  or  his  duly  appointed  ex- 
aminers, should  the  superintendent  of  banks  in  his  dis- 
cretion deem  it  necessary  or  desirable  that  such  examina- 
tion be  made;  and  the  expense  of  such  examination  shall 
be  paid  by  such  depositary  bank;  and  if  any  such  bank 
Effect  of  refusal,  shall  refuse  to  permit  such  examination  to  be  made  by, 
or  under  the  direction  of,  the  superintendent  of  banks, 
then  the  superintendent  of  banks  shall  notify  in  writing 
every  bank  depositing  its  funds  with  such  bank,  to  with- 
draw its  deposits  therefrom,  and  all  such  banks  shall 
comply  with  such  order. 

Natl.  Banking  Ass'n       Section  48a.    Any  national  banking  association,  whose 

■with    principal  place  •'  ="  ' 

of  business  in  State,  principal    place    of   business   is   in    this    state,    is    hereby 

authorized  to  act  in    ^  "^  *^  »  ./ 

fiduciary  capacities,  authorized  to  act  in  fiduciary  capacities  in  all  respects  as 

as  provided  by  Fed.  •'  ^  ^ 

Reserve  Act.  provided  by  the  acts  of  congress,  approved  December  23, 
1913,  and  amendments  thereof,  commonly  known  as  the 
federal  reserve  act,   and  all  acts  herein  provided   to  be 
performed  by  the  state  treasurer,   the  superintendent  of 
banks  or  other  public  officials  for  or  in  respect  of  trust 
companies,   shall  be  performed  for  such  national  bank- 
a^tho^izefin^sec"',  '^S    association    equally    with    trust    companies.       Every 
may  act  i^^fi^udary  g^^^j^  national  banking  association  which  shall  be  author- 
ise] 


GENERAL  PROVISIONS  §  4Sc 

ized  to  exercise  said  fiduciary  powers,  and  which  has 
qualified  by  making  the  deposit  of  securities  required  by 
the  law  of  this  state,  may  act,  or  may  be  appointed  by 
any  court  to  act  in  any  such  capacity  in  like  manner  as  an 
individual.      The   superintendent   of   banks   shall    inspect  Supt.  shall  examine 

I  -111  11  ri  books,  assets,  etc., 

and  examme  the  books,  records  and  assets  or  the  trust  of  trust  dept.  of 
department  of  each  national  banking  association  which 
conducts  a  trust  department  in  this  state  to  the  same 
extent  that  the  said  superintendent  of  banks  exercises 
visitorial  supervision  over  trust  companies  organized  and 
existing  under  the  law^s  of  this  state. 

The  charge  by  the  state  banking  department  for  all 
services  rendered  to  any  national  banking  association  by 
the  superintendent  of  banks,  in  accordance  with  the  pro- 
visions of  this  section,  shall  be  paid  by  the  national  bank- 
ing association  requiring  such  services.      Such  charge  for  charges  and  cost  for 

iiii  1.  •         ^     \_         lI.  •     m.         1        ^        C  services  rendered  by 

services  shall    be   determmed    by   the   supermtendent   or  state  Banking  Dept. 
banks,    and    shall    be   no    higher    than    the    charge    for   a 
similar   service   to   trust  companies   organized   under   the 
laws  of  this  state. 

The  cost  of  all  regular  and  ordinary  service  shall  be 
calculated  upon  the  amount  of  the  securities  deposited  by 
each  such  national  bank  with  the  treasurer  of  the  state 
for  the  due  execution  and  faithful  performance  of  its 
court  and  private  trusts  at  the  same  ratio  as  is  applied  to 
the  capital  and  surplus  of  trust  companies  organized 
under  the  law^s  of  this  state  in  determining  the  cost  to 
them  for  such  services. 

The  cost  of  all  special  and  extraordinary  services  shall 
be  the  same  as  that  provided  for  in  section  one  hundred 
twenty-four  of  this  act. 

[Note  by  Publishers,  re  Section  48a,   a  new  section: 

This  is  an  enabling  section  putting  into  legal  operation  in  California  the  pro- 
visions of  the  Phelan  Act  recently  enacted  by  the  Congress  of  the  United  States, 
which  gives  to  National  banking  associations  the  right  to  conduct  a  trust  depart- 
ment in  connection  with  their  commercial  banking  business.  The  federal  law 
places  upon  the  State  in  which  the  National  association  desires  to  function  in 
that  regard  the  burden  of  making  operative  the  provisions  of  the  national  statute. 
Hence  the  provisions  of  the  above  Section  48a,  that  the  Superintendent  of  Banks 
shall  have  authority  to  perform  for  National  associations  which  are  authorized  to 

[591 


§49-51  BLYTH.  WITTER  &  CO. 

conduct  a  trust  department  in  this  State  such  service  as  is  required  by  the  Bank 
Act  in  the  case  of  a  State  trust  company;  the  expense  of  this  service  to  he 
determined  by  the  Superintendent  of  Banks  and  to  be  paid  by  the  National  asso- 
ciation receiving   such  service. 

Outline  of  necessary  procedure  for  any  National  Bank  formed  in  this  State 
contemplating  the  establishment  of  a  trust  department,  under  the  terms  of  this 
Section  is  given  in  a  letter  written  by  the  State  Banking  Department  and  con- 
tained in  the  Appendix  of  this  volume. 

^1n?s°Vnkby  com!  Sectioii  49.  It  shall  Hot  bc  kwful  for  any  commer- 
merciai  ''^^j'^^^^j'  cial  bank,  individual,  trust  company,  association,  firm, 
stock  company,  copartnership  or  corporation,  to  adver- 
tise or  put  forth  a  sign  as  a  savings  bank,  or  either 
directly  or  indirectly  or  in  any  way  to  solicit  or  receive 
deposits  or  to  transact  business  in  the  way  or  manner  of 
a  savings  bank,  or  to  advertise  that  he  or  it  is  receiving 
or  accepting  savings,  or  in  any  way  which  might  lead  the 
public  to  believe  that  such  deposits  are  received  or  in- 
vested under  the  same  conditions  or  in  the  same  manner 
as  deposits  in  savings  banks,  except  in  the  case  of  sav- 
ings banks  or  banks  having  savings  departments,  subject 
Penalty,  to  the  provisions  of  this  act.  Any  commercial  bank,  in- 
dividual, trust  company,  association,  firm,  stock  com- 
pany, copartnership  or  corporation,  violating  any  pro- 
vision of  this  section  shall  forfeit  to  this  state  one  hundred 
dollars  a  day  for  every  day  during  which  such  violation 
continues. 

^' t7posUast  certifi^       Section    50.      Every  bank  shall  post  in  a  conspicuous 
cate  from  Supt.  place  in  its  banking  room  or  branch  office  the  last  cer- 
tificate obtained  from  the  superintendent  of  banks  under 
the    provisions    of    either   section    nine    or    one    hundred 
twenty-seven  of  this  act. 

Court  may,  under        Section    5  I .     Any  court  having  appointed  and  having 

conditions  specified,    ....  .     .  . 

authorize  executor,  jurisdiction  of  any  executor,  administrator,  guardian,  as- 

administrator,    gruard- 

ian,  receiver,  signec,  receiver,  depositary  or  trustee,  upon  the  applica- 

trustee,  etc.,  to  de- 
posit money  in  State  tion  of  such  executor,   administrator,   guardian,   assignee, 

bank.  .  ,  .  ,  ,.         . 

receiver,  depositary  or  trustee,  or  upon  the  application 
of  any  person  having  an  interest  in  the  estate  adminis- 
tered upon  by  such  officer  or  trustee,  after  notice  to  other 
parties  in  interest  as  the  court  may  direct,  and  after  a 
hearing  upon  such  application,  may  authorize  such  officer 

[60] 


GENERAL  PROVISIONS §  51-53 

or  trustee  to  deposit  any  money  then  in  his  hands  as 
such  officer  or  trustee  or  which  may  thereafter  come  into 
his  hands,  and  until  the  further  order  of  the  court,  in  any 
bank  organized  under  the  laws  of  the  State  of  California; 
and  upon  such  deposit  being  made,  the  officer  or  trustee 
so  depositing  the  same  shall  thereafter  and  while  such 
moneys  remain  on  deposit  in  such  bank,  be  relieved  and 
discharged  from  all  liability  and  responsibility  therefor, 
and  the  bond  required  of  such  officer  or  trustee  given 
upon  his  appointment  shall  be  thereupon  by  said  court 
reduced  to  such  an  amount  as  the  court  may  deem  reason- 
able; such  deposit  shall  be  repaid  only  upon  the  orders  Such  deposit  payable 

only  on  court  order. 

of  said  court,  and  shall  be  a  preferred  claim  against  such 
bank  and  be  paid  in  full  before  any  other  depositor  of 
such  bank  shall  have  been  paid. 

Section   52.      Whenever  a  check  drawn  on  any  bank  Certified  check  must 

■^  be  immediately 

is  certified  by  any  officer  or  employee  of  such  bank,  the  charged. 
amount    thereof    shall    be    immediately    charged    against 
the  account  of  the  person,   firm  or  corporation  drawing 
the  same. 

It  shall  be  unlawful  for  any  officer  or  employee  of  any 
bank  to  certify  any  check  drawn  upon  such  bank  unless 
the  person,  firm  or  corporation  drawing  the  check  has 
on  deposit  with  the  bank  at  the  time  such  check  is  certi- 
fied, an  amount  of  money  subject  to  the  payment  of  such 
check,  equal  to  the  amount  specified  in  such  check. 

Any  officer  or  employee  of  any  bank  who  shall  wil-  Bank  officer  or  em- 

r    11  •     I  1  •    •  r     1   •  •  1      11  ployee  violating  Sec. 

fully  violate  the  provisions  or  this  section,  or  shall  resort  guilty  of  felony. 

to    any    device,     or    receive    any     fictitious     obligations, 

directly   or  indirectly,    in   order   to   evade   the   provisions 

hereof,    or  who   shall    certify   checks   before   the   amount 

thereof  shall  have  been  regularly  entered  to  the  credit  of 

the  drawer,  shall  be  guilty  of  a  felony. 

_         .  -  ^         -f,.  .      ,  ,  ,  111-  I'ar  value  of  capital 

Section    J  3.       1  he  capital  stock  or  any  bank  having  a  stock  $ioo  and  paid 
capital  stock  shall  have  a  par  value  of  one  hundred  dol-  certificate. 

[61] 


§  53-54  BLYTH.  WITTER  &   CO. 

lars  per  share,  and  the  paid-up  value  shall  be  endorsed 
upon  the  face  of  each  certificate  issued,  which  paid-up 
value  shall  be  the  same  on  all  certificates  issued.  No 
bank  shall  have  preferred  stock;  provided,  however,  that 
Proviso  as  to  non-  j^o  bank  whose  Capital  stock,  on  January   1,    1915,  failed 

compliance  prior  to  ^  j  ^ 

Jan.  1,  1915.  to  Comply  with  any  of  the  requirements  of  this  section, 
shall  be  compelled  to  change  its  capital  stock  in  compli- 
ance herewith. 

Real  estate  acquired        Section    54.     All  real  estate  purchased  by  any  bank  at 

by  bank  and  not  "^  •' 

necessary  in  its  busi-  sales  Under  pledges,  mortgages  or  deeds  of  trust  for  its 

ness,  must  be  sold  or  »  =.  c    c 

exchanged,  as  speci-  benefit  for  money  loaned  and  such  as  may  be  conveyed 
to  it  by  borrowers  in  satisfaction  and  discharge  of  loans 
made  thereon  and  all  other  real  estate  ow^ned  or  held  by 
it,  w^hich  is  not  necessary  for  carrying  on  its  business, 
must  be  sold  or  exchanged  for  other  real  estate  by  such 
bank  within  five  years  after  title  thereto  shall  have  vested 
in  it  by  purchase  or  otherwise;  provided,  however,  that 
no  exchange  of  such  real  estate  for  other  real  estate  shall 
be  made  unless  and  until  written  consent  thereto  shall 
first  be  given  by  the  superintendent  of  banks;  and  pro- 
vided, further,  that  any  real  estate  so  taken  in  exchange 
may  be  held  for  such  period  of  time  as  the  superintendent 
Parcels  not  sold  or  of  banks  may  fix  but  not  to  exceed   five  years.     Parcels 

exchanged  within        -,  ,  ,,  ■  i-i'-i 

said  time  purchas-  of  such  real   estate   not  sold   or   exchanged   withm   said 

able  by  any  person;      .  i  i  i    i  •  i 

procedure  outlined,  time  may  be  purchased  by  any  person  wanting  the  same 
upon  the  conditions  and  proceedings  following:  The 
intending  purchaser  may  file  a  petition  in  the  superior 
court  in  and  for  the  county  v/herein  said  real  estate  or 
any  portion  thereof  is  situated ;  upon  the  filing  of  such 
petition  a  citation  shall  be  issued  out  of  said  court  directed 
to  the  bank  ow^ning  such  real  estate  requiring  such  bank 
to  show  cause  on  a  day  certain  which  shall  be  not  earlier 
than  ten  days  after  the  service  of  such  citation,  why  com- 
missioners should  not  be  appointed  by  said  court  for  the 
purpose  of  appraising  the  value  of  the  real  estate  de- 
scribed in  the  petition  and  of  selling  the  same  at  public 
auction   under   the   provisions   of  this   section.      If   there 

[62] 


GENERAL  PROVISIONS  §  54 

shall  be  any  liens  or  encumbrances  of  record  against 
such  real  estate  the  person  or  persons  holding  such  liens 
or  encumbrances  shall  likewise  be  cited  and  the  court 
shall  in  its  final  decree  distribute  the  proceeds  of  such 
sale,  if  a  sale  thereof  shall  be  made,  according  to  the 
equities  of  the  parties.      If  it  shall  appear  at  the  hearing  Court  to  appoint 

,  ,  ,  ,  .  ,  ,         commissioners  to 

or  such  petition  that  the  real  estate  therein  sought  to  be  appraise  and  seii 

,  1-1111  11  1-  •!•  CL  ""^^^  estate  held  by 

purchased  is  held  by  such  bank  in  violation  or  the  pro-  bank  in  violation  of 
visions  of  this  section  or  of  the  constitution  of  this  state, 
the  court  shall  appoint  three  commissioners  to  appraise 
the  value  thereof  and  sell  the  same  at  public  auction  at 
the  county  seat  of  the  county  wherein  said  real  estate  or 
any  part  thereof  is  located.  Notice  of  which  said  sale  Procedure  governing 
shall  be  given  to  the  bank  owning  said  real  estate  and 
to  any  other  persons  interested  therein  as  shown  by  the 
records  of  such  county  at  least  ten  days  before  the  date 
of  such  sale  and  shall  be  published  once  a  week  for  three 
successive  weeks  in  some  newspaper  published  in  the 
county  where  such  real  estate  or  any  part  thereof  may  be 
located,  or  if  no  newspaper  shall  be  published  in  such 
county  then  in  a  newspaper  published  in  some  neighbor- 
ing county.  Such  notice  shall  state  the  time  and  place 
of  such  sale  and  shall  describe  the  real  estate  to  be  sold 
with  common  certainty  and  state  the  value  thereof  as 
fixed  by  the  appraisement  of  such  commissioners  and  state 
that  no  bid  less  than  such  appraised  value  will  be  re- 
ceived therefor.  No  sale  shall  be  made  for  an  amount 
less  than  the  appraised  value  of  such  real  estate  fixed  by 
said  commissioners,  and  in  the  event  that  no  bid  is  re-  if  no  bid  equals 

,  .  ,  -11  appraised  value, 

ceived  at  such  sale  at  least  equal  to  said  appraised  value  proceedings  not 

...  ,  .  .  renewable  within 

of  said  real  estate  no  intending  purchaser  can  institute  one  year. 
the  proceedings  provided  for  in  this  section  within  one 
year  thereafter.  In  case  of  any  sale  made  under  the 
provisions  of  this  section  and  of  the  refusal  of  any  bank 
owning  such  real  estate  or  of  any  lienholder  or  encum- 
brancer to  execute  the  conveyances  or  releases  necessary 
or  proper  to  vest  the  title  of  such  bank,  lienholder  or  en- 

[63] 


54-55  BLYTH.  WITTER  &   CO. 

cumbrancer  in  the  purchaser  thereof  the  court  shall  have 
power  in  such  proceedings  to  direct  said  commissioners 
to  execute  such  deeds,  conveyances  or  releases  upon  the 
payment  to  them  of  the  purchase  price  therefor.  The 
Fees  and  costs;  how  fees  of  such  Commissioners  and  cost  of  sale  shall  be  fixed 

limited  and  borne. 

by  the  court,  upon  making  such  appointment,  but  the 
entire  expense  thereof  shall  not  exceed  one  hundred  dol- 
lars. The  cost  of  any  such  proceedings  shall  be  borne 
by  the  intending  purchaser  if  no  sale  shall  be  made,  but  if 
a  sale  shall  be  made  the  costs  of  such  proceedings  shall  be 
borne  by  the  purchaser  of  the  property  and  the  person 
who  filed  the  petition  and  advanced  the  costs  of  such 
proceedings  shall  be  reimbursed  in  case  he  shall  not  be- 
come such  purchaser.  All  sales  hereunder  shall  be  re- 
turned to  the  court  having  jurisdiction  of  the  matter  in 
the  same  manner  as  in  the  case  of  sales,  by  commissioners, 
Power  of  Supt.  to  of  real  estate  on  foreclosure  of  mortgages.      Nothing  in 

write  down  bank      •   .  .  •  i        i      ii      i  i  i  /r  i 

realty  not  afifected  this  section  contamed  shall  be  deemed  to  afreet  the 
power  of  the  superintendent  of  banks  to  require  the 
w^riting  down  of  the  value  of  real  estate  held  by  any 
bank,  at  any  time,  when  such  writing  down  shall  be 
proper. 

[Note  by  Publishers,  re  Section  54,  amended  1917: 

Under  this  section,  as  it  formerly  stood,  banks  were  not  permitted  to  exchange 
real  estate.  They  were  authorized,  of  course,  to  sell  any  real  estate  of  which  they 
might  have  become  possessed,  but  were  not  allowed,  even  where  it  might  appear 
decidedly  advantageous  to  do  so,  to  transfer  any  real  estate  and  receive  in  lieu 
thereof  other  real  estate.  This  amendment  makes  such  exchange  of  real  estate 
possible.] 

Eeceiving  deposits,        Section    55.     Receiving  deposits,  issuing  certificates  of 

etc.,  not  creation  of  •  i         i  i  i   -ii  r  i  i     i        i-i  •         l 

debt  within  mean-  deposit,  checks  and  Dills  oT  exchange,  and  the  hke,  m  the 

ing  of  Civil  Coda.  .  .  r         i  i 

transaction  or  the  ordinary  business  or  a  bank,  must  not 
be  construed  to  be  the  creation  of  debt  within  the  mean- 
ing of  the  phrase  "create  debt"  in  section  three  hundred 
nine  of  the  Civil  Code,  nor  of  indebtedness  within  the 
meaning  of  the  phrase  "the  capital  stock  can  not  be 
diminished  to  an  amount  less  than  the  indebtedness  of 
the  corporation"  in  section  three  hundred  fifty-nine  of  the 
Restriction  on  re-  Civil  Codc,   except  that  no  bank  shall  reduce  its  capital 

duction  of  capital 

stock,  stock  to  an  amount  less  than  is  required  by  this  act  to  be 

[64] 


GENERAL  PROVISIONS  §  55-56 


maintained  by  such  bank,  or  less  than  any  indebtedness 
of  such  bank  other  than  such  deposits. 

The  terms  "real  estate,"  or  "real  property,"   or  "per-  "Keai  estate," 

1  "1  1     •  1.  •  L     11     L  1         "real  property," 

sonal   property,      when   used   m   this  act  shall   have  the  "personal  property," 

i/~i-  11111  1-  1  — ^°^  defined. 

meanmg  denned  m,  and  shall  be  construed  m  accordance 
with  the  provisions  of  Title  I  of  Part  I  of  division  second 
of  the  Civil  Code. 

Section    56.      Any  bank  is  hereby  authorized  and  em-  Any  bank  may  be- 
come member  of 
powered  to  become  a  member  of  a  federal  reserve  bank.  Federal  Reserve 

^  bank. 

Nothing  in  this  act  shall  prohibit  any  such  bank  from 
becoming  a  member  of  a  federal  reserve  bank,  in  the 
manner  provided  in  the  federal  reserve  act,  nor  from 
investing  any  part  of  its  capital  or  surplus  or  reserve  fund  Member  bank  may 

_  11.  invest  part  of  capi- 

in  the  capital  stock  of  such  federal  reserve  bank,  in  ac-  tai,  surplus,  or  re- 
serve fund  in  capital 

cordance  w^ith  the  terms  and   provisions  of  such   federal  stock  of  Federal 

,      .  in-  Reserve  bank,  as 

reserve  act;  provided,  that  such  investment  shall  m  no  specified. 
case  exceed  the  minimum  amount  required  to  join  or  as- 
sociate itself  with  or  maintain  membership  in  such  federal 
reserve  bank;  provided,  also,  that  such  investment  may 
be  carried  in  either  the  commercial,  savings,  or  trust 
department,  or  may  be  apportioned  to  any  two  or  all 
three  of  such  departments  of  any  departmental  state  bank 
member. 

Any  bank  joining  or  associating  itself  with  such  federal  confl^icrwith  state 

b,         I      ii    I  1  -11  _!.    :„    laws,  conferred  upon 

ank  shall  have  and  exercise  all  powers,   not  in  member  bank. 

conflict  with  the  laws  of  this  state,  which  are  conferred 
upon  any  member  bank  in  any  such  federal  reserve  bank, 
by  the  provisions  of  the  federal  reserve  act  and  the  regu- 
lations of  the  federal  reserve  board.  Such  member  bank 
and  its  directors,  officers  and  stockholders  shall  continue 
to  be  subject,  however,  to  all  liabilities  and  duties  im- 
posed upon  them  by  the  bank  act  and  by  any  other  law 
of  this  state. 

Any  bank  which  shall  have  become  a  member   of  a 
federal   reserve   bank   shall   be   subject   to    the   examina- 

[65] 


Member  bank  sub- 
ject to  federal  ex- 
aminations. 


§  5  6- 5  6a  BLYTH.  WITTER  &   CO. 


Supt.  may  accept 
such  examination  in 


tions  required  under  the  terms  of  the  federal  reserve  act, 
lieu  of  one  under  ^^^j  |.}^g  Superintendent  of  banks  may,   in  his  discretion. 

Act;  may  furnish  to  "^  "^ 

federal  bank  infor-  accept  such  examination  in  lieu  of  the  examination  re- 

mation,  ^ 

quired  under  the  provisions  of  this  act,  and  he,  his  agents 
and  employees,  may  furnish  to  the  federal  reserve  board, 
the  federal  reserve  bank,  or  to  examiners  duly  appointed 
by  the  federal  reserve  board  or  the  federal  reserve  bank, 
copies  of  all  examinations  made,  and  may  disclose  to 
such  federal  reserve  board,  federal  reserve  bank,  or  ex- 
aminer, any  information  with  reference  to  the  condition 
of  affairs  of  state  bank  members. 

[Note  by  Publishers,  re  Section  56,  amended  1919: 

Section  56  as  amended  makes  more  explicit  the  statement  of  conditions  under 
which  banks  in  the  State  system  may  enter  the  Federal  system  as  members  of  a 
Federal  Reserve  bank.  Such  State  banks  remain,  as  now,  fully  within  the  gov- 
ernment of  State  law,  but  they  are  permitted  to  contribute  the  capital  required 
for  membership  in  the  Federal  Reserve  Bank,  from  any  of  their  three  depart- 
ments, commercial,  savings  or  trust.  The  Superintendent  of  Banks  is  by  the 
amendment  permitted  to  supply  to  the  Federal  Reserve  Board  of  the  Federal  Re- 
serve Bank,  or  members  appointed  by  either,  copies  of  all  examinations  made  by 
the  Superintendent  of  Banks,  and  he  may  disclose  to  the  authorities  named  any 
information  with  reference  to  the  condition  of  affairs  of  State-bank  members. 
He  may  also  accept  the  examination  required  by  the  terms  of  the  Federal  Re- 
serve bank  in  lieu  of  the  examination  required  under  the  provisions  of  the  Bank 
Act. 

Section  56,  it  will  be  noted,  is  one  of  a  series  of  sections  amended  at  the 
1919  Session  of  the  Legislature,  which  have  in  view  the  bringing  about  of  a 
closer  relationship  between  our  State  banks  and  the  banks  of  the  Federal  system. 
The  other  sections  of  the  series  are  Sections  20  and  68.  (See  also  in  this  connec- 
tion Section  67,  providing  that  a  State-member  bank  may  exercise  the  principal 
privilege  accorded  to  a  member  of  a  Federal  Reserve  bank — namely,  the  privilege 
of  rediscount.)  As  regards  the  provisions  of  these  sections,  reference  is  made 
thereto  and  to  the  notes  accompanying  the  same. 

Briefly,  the  series  of  amendments  referred  to  provide  for  the  entrance  of 
State  banks  into  the  Federal  Reserve  system  as  member  banks,  though  still 
within  the  jurisdiction  and  control  of  the  State  banking  Department,  for  the 
exercise  of  all  rights  and  privileges  enjoyed  by  member  banks  in  the  Federal 
Reserve  system,  and  for  the  general  acceptance  of  the  Federal  Reserve  system 
and  its  practical  application  as  expressed  in  the  form  of  securities  in  which  a 
member  bank  may  invest. 

It  has  been  the  recent  policy  of  the  California  State  Banking  Department  to 
establish  cordial  working  relations  between  that  Department  and  the  Federal 
Reserve  Bank,  on  the  one  hand,  and  the  National  Bank  authorities  on  the  other 
hand,  to  the  end  that  there  may  be  cordial  co-operation,  and  that  the  information 
of  each  shall  be  common  to  all.  In  carrying  out  this  policy,  the  Department  has 
met  cordial  response  from  both  sources,  and  an  additional  element  of  safety  has 
thus  been  created  for  the  situation.] 

Any  bank  may  con-       Section  56a.     Nothing  in  this  act  shall  prevent  or  pro- 
vert  into  Natl. 

Banking  Ass'n,  hibit  any  bank  from  converting  into  a  national  banking 

under  federal  or  _  .    .  r  •  r  i 

state  law.  association  under  the  provisions  of  section  five  thousand 
one  hundred  fifty-four  of  the  United  States  revised  stat- 
utes, or  section  eight  of  the  federal  reserve  act,  or  any 
other  federal  or  state  law;  provided,   however,   that  no 

[66] 


GENERAL  PROVISIONS  §  56c 

savings  bank  and  no  departmental  bank  having  a  savings 
department,  organized  and  existing  under  the  laws  of  the 
State  of  California,  shall  convert  into  a  national  banking 
association  except  upon  the  following  conditions: 

1 .  Coincident  with  its  application   to   the  comptroller  Condition  for  con- 

^ '^  ^  version  by  state 

of  the  currency,  any  such  savings  or  departmental  bank  ^"^'"fs  ^^^^  <"• 

•^  •'  o  I-  bank  having  sav- 

shall  file  with  the  superintendent  of  banks  formal  notice  ^°^^  department. 
of  intention  to  convert  into  a  national  banking  associa- 
tion. 

2.  Prior  to  conversion,  any  such  savings  or  depart- 
mental bank  shall  place  in  the  hands  of  the  superintend- 
ent of  banks, 

(a)  A  constructive  notice  for  newspaper  advertise- 
ment, directed  to  its  savings  depositors,  of  the  fact  of 
conversion; 

(b)  Actual  notice  addressed  to  each  and  every  sav- 
ings depositor,  at  his  or  her  last  known  address,  enclosed 
in  stamped  and  addressed  envelopes  ready  for  mailing, 
this  notice  to  be  as  follows: 

"You  are  hereby  notified  that  the  undersigned,  for- 
merly the ,  now  the ,  has  converted 

from  a  banking  corporation  existing  under  the  laws  of 
California  into  a  national  banking  association;  and  has 
therefore  ceased  to  be  under  the  jurisdiction  and  direc- 
tion of  the  California  state  banking  department  and  the 
bank  act  of  California,  and  is  now  under  the  jurisdiction 
and  control  of  the  federal  reserve  act  and  the  national 
act."  No  other  matter  may  be  enclosed  with  this  notice 
unless  by  permission  of  the  superintendent  of  banks. 

3.  Upon  conversion  said  bank  shall  file  with  the  sup-  upon  conversion 

bank    to    file    with 

erintendent   of   banks   a    copy    of    its   authorization    as   a  Supt.  certified  copy 

of  its  authorization 

national  banking  association,  certified  by  the  comptroller  and  surrender  state 
of  the  currency;  and  shall  surrender  to  the  superintend- 
ent of  banks  its  license  as  a  state  banking  corporation. 

[67] 


§  56a-57  BLYTH,  WITTER  &   CO. 

Immediately  foi-        4     Immediately    following    the   conversion    of   a    state 

lowing  conversion, 

supt.  shall  publish  bank,   the  superintendent   of  banks  shall   cause  the  pub- 
notice  of  fact  of  "^  '^ 

conversion,  as  speci-  lication    of    the    notice    provided    in    subdivision     (a)     of 

fied. 

paragraph  two  of  this  section;  same  to  be  at  least  once 
a  week  for  four  successive  w^eeks  in  a  newspaper  of  gen- 
eral circulation,  printed  and  published  in  every  town 
where  said  bank  transacts  its  business  and  if  there  be  no 
such  paper  in  any  such  town  or  towns,  then  in  the  county 
where  such  bank  transacts  its  business,  and  the  superin- 
tendent of  banks  shall  cause  to  be  mailed  the  notices 
provided  in  subdivision  (b)  of  paragraph  two  of  this 
section.  The  advertisement  shall  be  at  the  expense  of 
the  converting  bank,  prepaid  to  the  department. 

[Note  by  Publisher  to  Section  56a,  a  new  section  enacted  in  1919:  This  sec- 
tion provides  for  one  of  the  important  changes  in  the  Bank  Act.  It  is  introduced 
to  insure  the  right  of  every  bank  in  the  State  system  to  convert  into  a  National 
association  if  it  so  desires  but  such  conversion  in  the  case  of  a  savings  bank  or  of 
a  departmental  bank  having  a  savings  department  can  be  accomplished  only 
under  such  conditions  as  will  advise  every  depositor  in  the  savings  bank  or  in 
the  bank  having  a  savings  department  of  the  character  of  the  change  which  takes 
place  by  conversion.  This  section  provides  that,  coincident  with  the  application 
of  a  State  bank  to  convert,  notice  of  such  intention  shall  be  given  to  the  Super- 
intendent of  Banks,  Before  such  conversion  is  effected  such  savings  bank  or 
departmental  bank  having  a  savings  department  shall  place  in  the  hands  of  the 
Superintendent  of  Banks  a  constructive  notice,  for  newspaper  publication,  directed 
to  its  savings  depositors,  of  the  fact  of  conversion,  and,  (an  actual  notice,)  ad- 
dressed to  each  and  every  stockholder  at  his  or  her  last  known  address,  enclosed  in 
stamped  and  addressed  envelope  ready  for  mailing,  a  written  notice  which  advises 
said  depositor  that  the  bank  has  ceased  to  be  under  the  jurisdiction  and  direction 
of  the  California  State  Banking  Department  and  is  now  under  the  jurisdiction  and 
control  of  the  Federal  Reserve  Act  and  the  National  Bank  Act.  Both  of  these 
notices  are  to  be  made  effective  after  the  conversion;  one  by  publication  and  the 
other  by  mailing  by  the  Superintendent  of  Banks.  Such  a  provision  is  made  pos- 
sible by  an  amendment  to  Section  5154  of  the  Revised  Statutes  of  the  United 
States,  which  in  its  new  expression  becomes  Section  8  of  the  Federal  Reserve 
Act,  and  provides  that  the  conversion  of  a  State  bank  into  a  National  association 
shall  not  be  in  contravention  of  the  State  law.  Prior  to  this  amendment  to  the 
Federal  statute,  any  State  bank,  without  any  authority  whatever  from  the  State 
government,  could  convert,  and  its  savings  deposits  would  be  carried  by  operation 
of  law  into  a  National  association.  Section  56a  in  effect  gives  to  every  savings 
depositor  in  the  State  system  the  right  of  determining  whether  or  not  he  shall 
remain  as  a  depositor  under  State  jurisdiction  or  become  a  depositor  under 
national  law.] 

m^ent°o°r^*o"Te'v?ed       Section  5  7.      Whenever  in  this  act  it  is  required  that 
or  issued  by  State  jQ^ns  or  investments  shall  be  secisred  by  a  first  lien  on  real 

or  subdivision  there-  •' 

of,  if  same  or  in-  estate,  the  lien  of  any  tax,  assessment  or  bond  levied  or 

stallment  thereof  not  '  j  7 

d^em'ed "  Hor  en'-  ^^ucd  by  this  State  or  by  any  county,  city  and  county, 

cumbrance  as  re-  ^ity,  town,  municipality,  school  district,  reclamation  dis- 
cards requirement         "^  '  i  •/  r 

of  first  lien  real-  trict,  irrigation  district  or  any  other  political  or  govern- 

estate  security.  >  ^  ^        ^  «^^^ 

mental   subdivision   of   this   state    (not   including   bonds 
given  pursuant  to  any  law  authorizing  the  same  by  any 

[681 


sessment  upon  real 
propeity,  and  lien 
securing  payment 
of  assessments  or 
subscriptions  in  re- 


GENERAL  PROVISIONS  §  57-58 

person  or  corporation  in  lieu  of  payment  of  any  tax  or 

assessment  levied  against  any  particular  real  property) 

and  the  lien  of  any  assessment  levied  to  pay  such  bonds 

shall  not  be  deemed  to  be  a  prior  encumbrsmce  or  lien 

on  such  real  property  unless  an  installment  or  call  of 

such  tax,  assessment  or  bond  shall  be  due  and  delinquent ; 

and  any  bonds  given  pursuant  to  any  law  authorizing  the  ?nt  to  faw  "by"Iny 

same  by  any  person  or  corporation  in  lieu  of  payment  of  tion^LTieu^oTpay- 

any  tax  or  assessment  levied  against  any  particular  real  ™^°*  ^^  ^^^  °^  ^^' 

property  and  any  lien  given  to  secure  the  pajmient  of  P'^°P^'*y'  ^""^  ^'^° 

assessments  or  subscriptions  to  meet  the  requirements  of 

any  law  of  the  United  States  in  respect  to  any  irrigation  tfo*^!?  ^ro  Yct^in'thif* 

project  of  the  United  States  in  this  state  which  may  be  f*^*®;  ^^'f-  f""^  ^« 

■^        '  •'  levied,  under  law  of 

levied,  made  or  received  by  any  corporation  or  associa-  Y'  ^  — ^^f^  "°t 

■^  •'  *  deemed  prior  en- 

tion  formed  to  carry  out  the  objects  and  requirements  of  cumtrance  or  Uen, 
any  such  law  of  the  United  States  shaU  not  be  deemed  to 
be  a  prior  encumbrance  or  lien  on  such  real  property  if 
the  lien  given  to  secure  such  assessments  and  subscrip- 
tions taken  with  the  loan  or  investment  so  secured  sheJl 
amount  to  not  more  them  sixty  per  centum  of  the  meu-ket 
value  of  the  land  securing  the  same. 

Section    58.      Any  bank  possessing  a  capital  and  sur-  E^"^„'^'*'^ 

•^  ^  =*  '^  _         _  $1,000,000  or  more 

plus  of  one  million  dollars  or  more  may  file  application  capital  and  surplus 

may  apply  to  Supt. 

with  the  superintendent  of  banks  for  permission  to  exer-  to  exercise  pov-ers 

as  follows: 

cise,  upon  such  conditions  and  under  such  regulations  as 
he  may  prescribe,  either  or  both  of  the  following  powers: 

First — To  establish  branches  in  foreign  countries  or  in  ^-  '^°  establish 

foreigTi  branches, 

dependencies  or  insular  possessions  of  the  United  States  and/or 
for  the  furtherance  of  the  foreign  commerce  of  this  state 
and  of  the  United  States. 

Second— To   invest  an  amount  not  exceeding  in   the  ^^  tanks'orUrpora-'' 
aggregate  ten  per  centum  of  its  paid-in  capital  stock  and  ^wlngaged^in^n- 
surplus  in  the  stock  of  one  or  more  banks  or  corporations  temationai  or  for- 

■"^  ^  eign  banking,  as 

chartered  or  incorporated  under  the  laws  of  the  State  of  specified. 
California,    and    principally   engaged    in    international    or 
foreign  banking  or  banking  in  a  dependency  or  insular 

[69] 


§  58  BLYTH.  WITTER  &  CO. 

possession  of  the  United  States  either  directly  or  through 
the  agency,  ownership  or  control  of  local  institutions  in 
foreign  countries,  or  in  such  dependencies  or  insular  pos- 
sessions. 

Such  application  shall  specify  the  name  and  capital  of 
the  bank  filing  it,  the  powers  applied  for  and  the  place 
or  places  where  the  banking  operations  proposed  are  to 
or^rS^cTllZ^^tTot  he  carried  on.  The  superintendent  of  banks  shall  have 
in  whole  or  part,  pQ^gj.  jq  approve  or  to  reject  such  application  in 
whole  or  in  part  if  for  any  reason  the  granting  of  such 
application  is  deemed  inexpedient,  and  shall  also  have 
power  from  time  to  time  to  increase  or  decrease  the 
number  of  places  where  such  banking  operations  may  be 
carried  on. 

^°di™n^'of  7oreig"n       Evcry  bank   operating   foreign   branches   shall   be   re- 
branches, etc.,  to  be  quired  to    furnish  information  concerning  the  condition  of 

furnished    Supt.    on   ^  ^ 

demand,  such  branches  to  the  superintendent  of  banks  upon  de- 
mand, and  every  bank  investing  in  the  capital  stock  of 
banks  or  corporations  described  under  subparagraph  two 
of  the  first  paragraph  of  this  section  shall  be  required  to 
furnish  information  concerning  the  condition  of  such 
banks  or  corporations  to  the  superintendent  of  banks 
upon  demand,  and  the  superintendent  of  banks  may 
order  special  examinations  of  the  said  branches,  banks 
or  corporations  at  such  time  or  times  as  he  may  deem 
best.  The  cost  of  such  special  examinations  shall  be 
paid  by  said  branches,  banks  or  corporations. 

Before  any  bank  shall  be  permitted  to  purchase  stock 
in  any  such  corporation  the  said  corporation  shall  enter 
into  an  agreement  or  undertaking  with  the  superin- 
tendent of  banks  to  restrict  its  operations  or  conduct  its 
business  in  such  manner  or  under  such  limitations  and 
restrictions  as  the  said  superintendent  of  banks  may  pre- 
scribe for  the  place  or  places  w^herein  such  business  is  to 
Su"t.'^n?t'comphed  ^^  Conducted.  If  at  any  time  the  superintendent  of  banks 
^ute' inveTtlgationi  ^hall  ascertain  that  the  regulations  by  him  are  not  being 

[701 


GENERAL  PROVISIONS  §  58 

complied  with,  said  superintendent  of  banks  shall  be 
authorized  and  shall  have  power  to  institute  an  investiga- 
tion of  the  matter  and  to  send  for  persons  and  papers, 
subpoena  witnesses  and  administer  oaths  in  order  to 
satisfy  himself  as  to  the  actual  nature  of  the  transactions 
referred  to.  Should  such  investigation  result  in  establish- 
ing the  failure  of  the  corporation  in  question,  or  of  the 
bank  or  banks  which  may  be  stockholders  therein,  to 
comply  with  the  regulations  laid  down  by  the  said  super- 
intendent of  banks,  such  banks  may  be  required  to  dis- 
pose of  stockholdings  in  the  said  corporation  upon  thirty 
days*  notice,  and  in  the  event  of  their  noncompliance 
with  such  order  the  superintendent  of  banks  may  institute 
proceedings  for  forfeiture  of  license. 

Every  such  bank  shall   conduct  the  accounts   of  each  Such  bank  to  con- 

.  i-i  iiri  fi  ^""^^  accounts  of 

foreign    branch   independently   of   the   accounts   of   other  each  foreign  branch 

c  •  1  I  11-I11'  ir-i  i-r  independently. 

foreign  branches  established  by  it  and  of  its  home  ofiice, 
and  shall  at  the  end  of  each  fiscal  period  transfer  to  its 
general  ledger  the  profit  or  loss  accruing  to  each  branch 
as  a  separate  item. 

[Note  by  Publishers  to  Section  58,   a  new  section  enacted  in  1919: 

Of  the  two  principal  problems  that  pressed  for  consideration  in  the  redrafting 
of  the  Bank  Act,  one  was  the  problem  of  the  Federal  Reserve  bank  as  it  applied 
to  the  State  banks  of  California.  The  other  problem  was  the  financial  relations 
of  the  California  banks  with  the  world  at  large,  and  especially  as  they  apply  to 
American  commercial  expansion  in  the  Orient  and  South  America. 

Section  58,  a  new  section,  is,  we  believe,  the  first  comprehensive  handling  of 
this  situation.  Briefly,  it  provides  that  any  California  bank  with  a  capital  and 
surplus  of  $1,000,000  or  more  may  establish  foreign  branches  or  branches  in  the 
dependencies  or  insular  possessions  of  the  United  States  for  the  furtherance  of 
the  foreign  commerce  of  this  State  and  of  the  United  States.  Further,  it  may 
invest  an  amount  not  exceeding  in  the  aggregate  10  per  cent,  of  its  paid-in 
capital  and  surplus  in  the  stock  of  one  of  more  banks  or  corporations  chartered 
or  incorporated  under  the  laws  of  the  State  of  California,  principally  engaged  in 
the  international  or  foreign  banking  business  in  a  dependency  or  insular  posses- 
sion of  the  United  States,  Every  bank  operating  foreign  branches  within  the 
limitations  of  this  amendment  is  required  to  furnish  information  concerning  the 
condition  of  such  branches  to  the  Superintendent  of  Banks  upon  demand,  and  shall 
be  subject  to   the  examination  and  jurisdiction  of  the   State  Banking  Department. 

The  general  purpose  and  effect  of  this  new  section  are  apparent:  It  permits 
commercially  organized  corporations  to  have  branches  in  any  part  of  the  world. 
It  will  permit  such  corporations  to  own  stock  in  foreign  banks  and  it  will  grant 
to  them  a  privilege  in  foreign  and  domestic  exchange  that  would  be  utterly  be- 
yond their  reach  without  the   introduction   of  this   enabling  statute.] 


[71] 


§  60  BLYTH,  WITTER  &   CO. 


ARTICLE  II. 
•'       •         SAVINGS  BANKS. 
Capital  rsruired  of        Scciion    60.      Evcrv  savinffs  bank  hereafter  organized 

savings  banks.  ^  a  o 

must  have  paid  up  in  cash  a  capital  stock  not  less  than 

^"^"5  MO— S25  oo"  (^^  Twenty-five  thousand  dollars  if  its  principal  place 
of  business  is  located  in  any  locality  the  population  of 
which  does  not  exceed  five  thousand  persons; 

popluT-^so^or  (b)  Fifty  thousand  dollars  if  its  principal  place  of 
business  is  located  in  any  city  the  population  of  which  is 
more  than  five  thousand  persons,  but  does  not  exceed 
twenty-five  thousand  persons; 

,ol?'S-no!S.  (^)  One  hundred  thousand  dollars  if  its  principal 
place  of  business  is  located  in  any  city  the  population  of 
which  is  more  than  twenty-five  thousand  persons  but  does 
not  exceed  one  hundred  thousand  persons; 

pfpuTtion-S!ooo"!  (d)  Two  hundred  thousand  dollars  if  its  principal 
place  of  business  is  located  in  any  city  the  population  of 
which  is  more  than  one  hundred  thousand  persons  but 
does  not  exceed  two  hundred  thousand  persons; 

0^ Son-?30o°boo°  (^^  Three  hundred  thousand  dollars  if  its  principal 
place  of  business  is  located  in  any  city  the  population  of 
w^hich  is  more  than  tw^o  hundred  thousand  persons. 

Keserve  fund  of  sav-  C  •.•  i.L     t  •  1_        1  -1  -iL         1. 

ings  bank  without        Lxcepting   that   any   savmgs    bank   organized    without 
capi  a  s  oc  .  ^,^pjj.g^]  gtock  must  have  a  reserve  fund  of  at  least  one 
million  dollars. 
No  certificate  to  be        Until    the   Capital   stock   or   reserve    fund   hereinbefore 

issued  until  such  ^ 

capital  stock  or  re-  required  shall  be  actually  paid  in,  the  superintendent  of 

serve  fund  is  paid  in.  ^  -^     ' 

banks  shall  refuse  to  issue  the  certificate  required  by  this 
Classification  not  to  act.      The  foregoing  classification  shall  not  apply  to  any 

apply  to  certain  .  1  1  1  1         •  •  1   •    1       1  -J 

banks,  savings  bank  already  in  existence  w^hich  has  received 
its  certificate  to  do  a  banking  business  from  the  superin- 
tendent of  banks;  nor  to  any  bank  the  location  of  which 

[72] 


SAVINGS  BANKS  §60-61 

shall  have  been  included  by  annexation  or  consolidation  legal  invest ^^^ 
within  the  limits  of  a  city  of  a  class  requiring  a  larger  ments. 
capitalization,  but  no  bank  thus  excepted  shall  be  per- 
mitted to  establish  any  new  branch  office  as  provided  in 
section  nine  of  this  act  or  to  remove  its  place  of  business 
from  the  original  limits  of  the  city  or  township  wherein 
it  was  located  prior  to  such  annexation  or  consolidation 
until  it  shall  have  the  capital  required  of  banks  in  such 
city  not  w^ithin  said  exception.  Such  excepted  banks  may 
not  in  any  case  decrease  their  capital  stock  but  may  in- 
crease the  same  in  the  m^anner  provided  by  law  to  an 
amount  either  greater  or  less  than  that  required  of  banks 
in  such  city  not  within  said  exception;  provided,  that 
nothing  herein  shall  be  construed  to  affect  the  provisions  Nothing  herein  af- 

fc      1   .  I       .  I  .  fects  provisions  of 

section  nineteen  or  this  act  relative  to  the  proportion  sec.  19  or  of  See. 

<•  .      1  1  1  1  .  f  .  23  of  Act. 

or  capital  and  surplus  to  deposits  or  or  section  tw^enty- 
three  of  this  act  relative  to  the  capital  stock  required  of 
banks  doing  a  departmental  business.  The  provisions  of 
section  twenty-three  of  this  act,  as  to  population,  shall 
apply  to  any  bank  organized  under  the  provisions  of  this 
section. 

Section    61.      Any   savings   bank   may   purchase,    hold  Property  which 

"^  "^  savings  bank  may 

and  convey  real  or  personal  property  as  follows:  purchase,  hold  and 

•^  '■  tr        tr         J  convey. 

1 .  The  lot  and  building  in  which  the  business  of  the  ^"^^  premises,  fur- 

niture,  fixtures,  etc., 

bank  is  carried  on;  furniture  and  fixtures,  vaults  and  safe  two-thirds  vote  of 

directors  necessary 

deposit  vaults  and  boxes  necessary  or  proper  to  carry  on  f°r  purchase  or 

construction. 

its  banking  business;  such  lot  and  building,  furniture  and 
fixtures,  vaults  and  safe  deposit  vaults  and  boxes  shall 
not,  in  the  aggregate,  be  carried  on  the  books  of  such 
bank  as  an  asset  to  an  amount  exceeding  its  paid-up 
capital  and  surplus;  and  hereafter,  the  authority  of  a 
two-thirds  vote  of  all  of  the  directors  shall  be  necessary 
to  authorize  the  purchase  of  such  lot  and  building,  or  the 
construction   of  such  building. 

2.  Such    as    may    have    been    mortgaged,    pledged    or  Property  mortgaged, 

pledged  or  conveyed 

conveyed  to  it  in  trust  for  its  benefit  in  good  faith,   for  as  security  for 

loans. 

173] 


§  6  I  BLYTH,  WITTER  &   CO. 

BONDS  WHICH  ARE  monev  loaned  in  pursuance  of  the  regular  business  of  the 

LEGAL  INVEST-  , 

MENTS — Continued,    corporation. 

3.   Such   as   may   have   been    purchased   at   any   sales 
Property  purcha<^ed  under  pledge,    mortgage   or   deed   of   trust  made   for   its 

at  sales  under  pledge,    ,  /-       r  i  i  i  i  i 

mortgage,  etc.  beneht  for  money  so  loaned  and  such  as  may  be  con- 
veyed to  it  by  borrowers  in  satisfaction  and  discharge  of 
loans  made  thereon. 


What  personal  prop 
erty  savings  bank 


No  savings  bank  shall  purchase,   own,  or  sell  personal 
may  purchase^  own  pj-Qperty,   except  such  as  may  be  requisite  for  its  imme- 
diate accommodation  for  the  convenient  transaction  of 
its  business,   notes   or  bonds  secured  by  trust  deeds   or 
mortgages  on  real  estate,  bonds,   securities  or  evidences 
of  indebtedness,  public  or  private,  gold  or  silver  bullion 
and  United  States  mint  certificates  of  ascertained  value, 
and    evidences    of    debt    issued    by    the    United    States. 
^ies^ltc^,' s&vingl  ^^  savings  bank  shall  purchase,   own,  hold  or  convey 
banks  may  purchase,  jjoj^ds,  securities  or  evidcnces  of  indebtedness,  public  or 

own  or  sell,  '  '    *^ 

private,  except  as  follows: 
Bonds  or  interest-        (a)    Bonds  or  interest-bcaring  notes  or  obligations  of 

bearing  notes  or  ob-  ^  ... 

ligations  of  u.  3.,    the  United  States,  or  those  for  which  the  faith  and  credit 

etc.  ,  ' 

of  the  United  States  are  pledged  for  the  pajonent  of 
principal  and  interest,  or  those  issued  under  authority 
of  the  United  States; 

^iT:^  Flanc°e^  c"n-        (^*)    Bonds  or  interest-bearing  notes  or  obligations  of 

ada,  etc.,  when  ap- 


proved by  Supt. 


Engleuid  or  the  United  Kingdom  of  Great  Britain  and 
Ireland,  or  Freuice,  or  the  Dominion  of  Canada,  or  those 
for  which  the  faith  and  credit  of  any  one  or  more  of  said 
countries  are  pledged  for  the  payment  of  principal  and 
interest;  or  bonds  or  interest-bearing  notes  or  obligations 
of  any  other  foreign  country  or  government,  which  bonds 
or  interest-bearing  notes  or  obligations  shall  have  first 
been  approved  by  the  superintendent  of  banks  in  writing; 

[Publishers'    Note   1,    Section   61,   amended  1919: 
The  above  clause  "(aa-)"  was  added  in  1919.] 

Bonds  of  this  State        (b)    Bonds  of  this  state,  or  those  for  which  the  faith 

or  its  subdivisions. 

and  credit  of  the  State  of  California  are  pledged  for  the 

174] 


SAVINGS  BANKS §  61 

payment  of  principal  and  interest,  or  those  of  any  county,  bonds  which  are 

1  1     1-        •  r      1  •  LEGAL   INVEST- 

city  and  county,  city  or  school  district  of  this  state;  ments— continued. 

(c)  Bonds  or  stocks  or  notes  of  any  state  in  the  United 

States  that  has  not,  within  five  years  previous  to  making  Bonds,  stocks,  etc., 

'  I        1    •         1  of  any  State  in  U.  S. 

such  investment  by  such  bank,  defaulted  in  the  payment  or  any  county,  city 

,,  ....  ,  »  ^'^■^  county,  city  or 

of  any  part  of  either  principal  or  interest,  or  those  of  any  town,  in  any  foreign 
county,  city  and  county,  city  or  town,  m  any  state  of  the  more  than  20,000 

-y.,—  ,  ,  10  i-z-i    IT  •  •  J    population,  with 

United  States  other  than  the  State  of  California,  issued  bonded  indebtedness 

,-  .  .,  i"-!  within  specified  limit, 

under  authority  of  any  law  of  such  state,  which  county,  which  bonds,  etc, 

,  .  •.  .  11  1  L       iL       r    J      have  not  defaulted, 

City  and  county,  city  or  town,  had,  as  shown  by  the  red-  etc. 
eral  or  state  census  next  preceding  such  investment,  a 
population  of  more  than  twenty  thousand  inhabitants; 
provided,  however,  that  the  entire  bonded  indebtedness 
of  such  county,  city  and  county,  city  or  town,  including 
such  issue  of  bonds  or  stocks  or  notes,  does  not  exceed 
fifteen  per  centum  of  the  value  of  the  taxable  property 
therein  as  shown  by  its  last  equalized  assessment  roll ;  and 
provided,  further,  that  such  county,  city  and  county,  city 
or  town,  or  the  state  in  which  it  is  located  has  not  de- 
faulted in  payment  of  any  part  of  either  principal  or 
interest  due  upon  any  legally  authorized  bond  or  stock 
or  note  issue  within  five  years  next  preceding  such  invest- 
ment; 

( d )  Bonds  of  any  district  organized  under  the  laws  Bonds  of  any  dis- 
of  the  State  of  California  which  are  required  to  be  and  laws  of  state  ap- 

.,,  ,,  ..  proved  by  commls- 

are  investigated  and  approved  by  a  commission  now  or  sion  under  state  law. 
hereafter  authorized  by  a  law  of  this  state  to  conduct 
such  investigation  and  give  such  approval  and  by  author- 
ity of  which  approval  said  bonds  are  declared  to  be  legal 
investments  for  savings  banks; 

(e)  Bonds  of  any  district  organized  under  the  laws  Bonds  of  any  dis- 

fio  e    r^    t'r  •  i  •  -iir'       ^'''''*  "°*  otherwise 

of  the  State  of  Csuifornia  not  otherwise  provided  for  in  provided  for  in  sec, 

,  .  .  ,  -  of  any  mutual 

this  section;  or  those  of  any  mutual  water  company  or-  water  company,  etc., 

-,-,  r     1  '  1  •  I       11       under  State  law. 

gemized  under  the  laws  of  this  state  and  operating  wholly 
within  this  state;  provided,  that  all  bonds  specified  in 
this  paragraph  shall  first  be  certified  by  the  superintend- 

[75] 


§  6  1  BLYTH.  WITTER  &   CO. 


BONDS  WHICH  ARE  eiit  of  banks  after  an  investigation  m  manner  and  form 

LEGAL  INVEST-  .  -iiri  i-  ♦.  fxl.'  i.  J 

MENTS— Continued,  as  IS  providcd  for  by  section  sixly-one-a  or  this  act;  ana 
provided,  further,  that  no  bonds  of  any  mutual  water 
company  shall  be  certified  by  the  superintendent  of 
banks  unless  the  company  issuing  said  bonds  shall  have 


Bonds  specified  in 
this  par.  to  be  first 


certified  by  Supt 


aftWinvestigati  n,  been  in  continuous  operation  for  a  period  of  five  years 
aext  preceding  the  application  for  said  certificate  and 
thall  have  served  not  less  than  seventy- five  per  centum 
of  the  lands  entitled  to  service  by  said  mutual  water 
company  for  a  period  of  not  less  than  three  years  next 
preceding  the  application  for  said  certificate; 

Bonds  of  intrastate        (f)    (1)    Bonds  of  any  railroad  corporation  incorpor- 

railroad  corporation  ii  rit«if/-«    it  •  i 

conforming  to  speci-  nted  Under  the  laws  of  the  otate  of  California  and  oper- 

fied  requirements.         .  i-ii-  -ii'i  i-i 

ating  exclusively  therein;  provided,  said  corporation  has 
had  net  earnings  for  the  period  herein  fixed  amounting 
to  at  least  one  and  one-fourth  times  the  interest  on  all 
its  outstanding  mortgage  indebtedness;  or, 

[Publishers'   Note  2.     Section  61,   amended   1919: 

The  phrase   "the  period  herein  fixed"    is  defined  in  the   second  paragraph  fol- 
lowing paragraph   "(k)"  of  this  section.] 

Bonds  of  R.  R.        (2)    Bonds  of  any  railroad  corporation  incorporated 

corporation  under  in  r  •I¥T-ic 

law  of  any  State  in  uuder  the  laws  of  any  state  m  the  United  States,  operat- 

U.  S.,  with  mileage    ,  i/-iii'ir  ii  i 

and  net  earnings  as  mg  at  least  five  hundred  miles  of  standard  gauge  track 
exclusive  of  sidings;  provided,  said  corporation  has  had 
net  earnings  for  the  period  herein  fixed  amounting  to  at 
least  one  and  one-half  times  the  interest  on  all  its  out- 
standing mortgage  indebtedness;  or, 

Bonds  of  any  R.  R.        ( 3  )    Bonds  of  any  railroad  corporation,  the  payment  of 

corporation  payment 

of  which  guaranteed  which   has   been   guaranteed,   both  as   to   principal   and 

by  R.  R.  corporation,    .  i»ii  •  •!• 

meeting  specified  re    mterest,  by  a  railroad  corporation  meeting  the  require- 

quirernents  as  to  net  e      '  %  ii--'  /^\  /rt\        e  i/<-\ 

earnings,  ments  of  either  subdivision  (1)  or  (2)  of  paragraph  (f) 
of  this  section;  provided,  that  such  guaranteeing  corpora- 
tion has  had  for  the  period  herein  fixed  net  earnings 
amounting  to  at  least  one  and  one-half  times  the  interest 
on  all  its  outstanding  mortgage  indebtedness  and,  in  ad- 
dition thereto,  sufficient,  taken  with  the  earnings  of  all 
corporations  whose  bonds  it  has  guaranteed,  to  qualify 

[76] 


SAVINGS  BANKS ^ 

as  investments  for  savings  banks,  as  in  this  section  pro-  legal  Tnvest-^^^ 
vided,  all  such  guaranteed  bonds;  provided,  that  the  MENTs-contmued. 
excess  of  income  of  any  corporation  whose  bonds  have 
been  so  guaranteed,  over  the  amount  required  by  this 
section  for  such  corporation,  shall  not  apply  to  or  be  in- 
cluded in  determining  the  income  so  required ;  (  provided, 
further,  that  the  guarantee  of  such  bonds  hereafter  guar- 
anteed must  establish  a  lien  upon  all  the  operating  prop- 
erties of  the  guaranteeing  corporation,  which  lien  must 
take  precedence  over  any  subsequent  issues  of  mortgage 
obligations  by  said  guaranteeing  corporation). 

[Publishers'  Note  3,   Section  61,   amended  1919: 

The   last    proviso,    enclosed   in   brackets,    at   the    end    of   subdivision    "(3)"    of 
paragraph   "(f)"   was  added  in   1919.] 


Effect  of  consolida- 
tion on  determination 
of  income, 


Nature  of  security 
required  for  bonds 
authorized    by    par. 
(f)    of  subdiv.    3, 


In  determining  the  income  of  any  corporation  specified 
in  paragraph  (f )  of  subdivision  three  of  this  section,  there 
shall  be  included  the  income  of  any  corporation  or  cor- 
porations out  of  which  it  shall  have  been  formed  through 
consolidation  or  merger,  and  of  any  corporation  or  cor- 
porations, the  entire  business  and  income  producing 
property  of  which  the  corporation  issuing  such  bonds  has 
wholly  acquired. 

All  bonds  authorized  for  investment  by  paragraph  (f ) 
of  subdivision  three  of  this  section  must  be  secured  by  a 
mortgage  or  deed  of  trust  which  is,  at  the  time  of  making 
such  investment,  either 

I.  A  closed  first  mortgage  or  deed  of  trust;  or,  oSd^f^trTs^or^' 

II.  A  first  mortgage  or  deed  of  trust  containing  pro-  rirst  mortgage  or 

,    ,  ,      ,  I  -1    (ieed  of  trust  with 

visions   restricting   the   issuance    of   further   bonds    until  restrictions  on  issu- 

,.  ,,  ,  'iiii  '"^  further  bonds,  as 

such  time  as  the  income  of  said  corporation  shall  have  spe  ified;  or 
been  at  least  sufficient,  during  the  twelve  months  next 
preceding  the  issuance  of  any  additional  bonds,  to  meet 
the  earning  requirements  specified  in  the  respective  sub- 
divisions of  this  paragraph  applicable  to  such  corpora- 
tion after  including  the  additional  bonds  then  proposed 
to  be  issued;  or, 

[77] 


§  6  1  BLYTH,  WITTER  &  CO. 


^^^legTlTnVes^^        '^'*   ^  refunding  mortgage  or  deed  of  trust  providing 

MENTs— Continued.  Jqj.  jj^g  retirement  of  all  prior  lien  mortgage  debts  of  said 

corporation,  and  restricting  the  issuance  of  further  bonds 

Refunding  mtge  or  ^^"^^^  such  time  as  the  income  of  said  corporation  shall 

deed  of  trust,  pro-  jj^ve  been  at  least  sufficient,  during  the  twelve  months 

vidm^  for  retirement  '  ^ 

of  prior  lien  mtge.  ^exl  preceding  the  issuance  of  any  additional  bonds,  to 

debts  and  restricting  r  =  ^ 

issuance  of  further  meet  the  earning  requirements  specified  in  the  respective 

bonas,  as  specified ;  ^         -«  » 

or  subdivisions  of  this  paragraph  applicable  to  such  corpor- 
ation after  including  the  additional  bonds  then  proposed 
to  be  issued;  or, 

Underlying  or  di-        jy^   ^jj  Underlying  or  divisional  closed  mortgage  or 

visional,   closed   mtge.  ^       o  a    a 

or  deed  of  trust  prop-  deed  of  trusl  of  property  which  forms  a  part  of  the  oper- 

erty  forming  part  of  r        r         j  r  »- 

the  operating  system  atlng  system  of  the  Corporation  then  owning  said  prop- 

of  corporation  then  =»       •'  *-  =>»-»- 

owning  said  property,  erty.  In  the  casc  of  bouds  secured  by  an  underlying  or 
divisional  closed  mortgage  or  deed  of  trust,  the  net  in- 
come required  by  this  section  shall  be  based  exclusively 
upon  the  income,  maintenance  charges,  operating  ex- 
penses, taxes,  and  mortgage  indebtedness  of  or  against 
the  property  covered  by  such  underlying  or  divisional 
closed  mortgage  or  deed  of  trust,  or,  if  such  income, 
maintenance  charges  or  operating  expenses  can  not  be 
definitely  ascertained,  on  the  proper  proportionate  share 
of  such  property  in  the  general  income,  maintenance 
charges,  operating  expenses,  and  taxes  of  the  corpora- 
tion then  owning  such  property  and  on  the  mortgage  in- 
debtedness of  or  against  the  property  covered  by  such 
underlying  or  divisional  closed  mortgage  or  deed  of  trust ; 
provided,  however,  that  if  the  payment  of  the  bonds 
secured  by  such  underlying  or  divisional  closed  mortgage 
or  deed  of  trust  shall  be  guaranteed  or  assumed  by 
the  corporation  then  owning  the  property  securing  the 
same,  such  bonds  shall  be  legal  investments  for  savings 
banks,  if  the  net  income  of  such  corporation  from  all 
sources  shall  equal  the  amount  herein  required,  notwith- 
standing any  insufficiency  of  the  income  derived  from 
the  property  covered   by  such  underlying  or   divisional 

[781 


SAVINGS  BANKS  §  6 1 

closed  mortgage  or  deed  of  trust  to  meet  the  require-  legal  divest -^'^^ 
ments  of  this  section.  MENTs-contmued. 

No  savings  bank  shall  purchase  the  bonds  of  any  rail-  fj^^a^^e  of  raUrc^r' 
road  corporation  deriving  less  than  twenty  per  centum  i^onds. 
of  its  gross  receipts  from  passenger  revenues. 

The  term,  "railroad  corporation,"  when  used  in  para-  tion-^d'efcied'^'"^* 
graph  (f)  of  subdivision  three  of  this  section,  shall  have 
the  meaning  defined  in  the  "public  utilities  act." 

(g)    Bonds  of  any  street  railroad  corporation;  or  of  Bonds  of  any  street 

railroad  ccrporation, 

any  gas:  water;  pipe  line;  light;  power;  light  and  power;  etc.,  or  other   public 

^  _  11  utility"  of  this  State 

gas,  light  and  power;  electrical;  telephone;  telegraph;  or  meeting  designated 

.  requirements:  — 

telephone  and  telegraph  corporation  or  of  any  other 
"public  utility"  incorporated  under  the  laws  of  the  State 
of  California;  and 

(1)  Operating  exclusively  in  the  State  of  California,  operating  exclusively 

^      '  r  s,  J  '    j^  state,  with  net 

provided  said  corporation  has  had,  for  the  period  herein  earnings,  as  specmed; 
fixed,  net  earnings  amounting  to  one  and  one-half  times 
the  interest  on  all  its  outstanding  mortgage  indebtedness; 
or, 

(2)  Operating  its  property  in  part  within  the  State  of  ''^"v^^^^f'^'A^-^ 
California,  provided  said  corporation  has  had,  for  each  specified  earnings; 
of  its  two  fiscsJ  years  next  preceding  such  investment, 

net  earnings  amounting  to  one  and  one-half  times  the 
interest  on  all  its  outstanding  mortgage  indebtedness;  or, 

(3)  The  payment  of  which  is  gueu-anteed,  both  as  to  The  payment. of 

"^  ...  .  which  is  guaranteed 

principal   and   interest,    by   a   public   utility   corporation  by  public  utility 

.  .  e        •  ■%  ii'--/i\  meeting  specified  re- 

meeting  the  requirements  of  either  subdivision    ( 1 )    or  quirements  and 

...  1      establishing  lien  as 

(2)  of  paragraph  (g)  of  this  section,  provided  that  such  indicated. 
guaranteeing  corporation  has  had  for  the  period  required 
in  the  respective  subdivisions  of  this  paragraph  relating 
thereto,  net  earnings  amounting  to  at  least  one  and  one- 
half  times  the  interest  on  all  of  said  guaranteeing  cor- 
poration's outstanding  mortgage  indebtedness,  and,  in 
addition  thereto,   sufficient,   taken  with  the  earnings  of 

[791 


§  61 BLYTH,  WITTER  &   CO. 

^°^leg^Tnves^:^  ^^^  corporations  whose  bonds  it  has  guaranteed,  to  qual- 
MENxs— Continued.  |fy  ^g  investments  for  savings  banks,  as  in  this  section 
provided,  all  such  guaranteed  bonds;  provided,  that  the 
excess  of  income  of  any  corporation  whose  bonds  have 
been  so  guaranteed,  over  the  amount  required  by  this 
section  for  such  corporation,  shall  not  apply  to  or  be  in- 
cluded in  determining  the  income  so  required ;  (  provided, 
further,  that  the  guarantee  of  such  bonds  hereafter  guar- 
anteed must  establish  a  lien  upon  all  the  operating  prop- 
erties of  the  guaranteeing  corporation  which  lien  must 
take  precedence  over  any  subsequent  issues  of  mortgage 
obligations  by  said  guaranteeing  corporation). 

[Publishers'  Note  4,  Section  61,   amended  1919: 

The   last   proviso,    enclosed    in   brackets,    at   the   end    of   the   above    subdivision 
"(3)",  was  added  in  1919.] 

Income  of  merged       jjj  determining  the  income  of  any  corporation  specified 

corporation — what  in-  °  j  r  sr 

eluded.  JJJ  paragraph  (g)  of  subdivision  three  of  this  section, 
there  shall  be  included  the  income  of  any  corporation  or 
corporations  out  of  which  it  shall  have  been  formed 
through  consolidation  or  merger,  and  of  any  corporation 
the  entire  business  and  income  producing  property  of 
which  the  corporation  issuing  such  bonds  has  wholly 
acquired. 

AJ^  ^°^^^,  author-       ^\\  bonds  authorized  for  investment  by  paragraph  (  g ) 

ized  by  par.(g)  must  •'    "^  ^       "^        vo' 

be  secured  by  mtge.  qJ  subdivision  three  of  this  section  must  be  secured  by  a 

or   deed    of    trust  "* 

mortgage  or  deed  of  trust  which  is  at  the  time  of  making 
such  investment;  either 

I.   A  closed  first  mortgage  or  deed  of  trust;  or. 

First  mtge,  or  deed       jj,   ^  first  mortgage  or  deed  of  trust  containing  pro- 
of trust  with  re';tnc-       ,   ,  ...  t>    i- 

tions  on  issuing  fur-  visions  restricting  the  issuance  of  further  bonds  until  such 

ther  bonds,  as  speci- 
fied; or  time  as  the  income  of  said  corporation  shall  have  been  at 

least  sufficient,  during  the  twelve  months  next  preceding 
the  issuance  of  any  additional  bonds,  to  meet  the  earn- 
-  ing  requirements  specified  in  the  respective  subdivisions 
of  this  paragraph  applicable  to  such  corporation  after  in- 
cluding the  additional  bonds  then  proposed  to  be  issued; 
or, 

[80] 


whi;h    is, 
either — 


Closed  first  mtge.  or 
deed  of  trust;  or 


SAVINGS  BANKS  §  6 1 


III.   A  refunding  mortgage  or  deed  of  trust  providing  ^^^^l  ^vest-^^^ 
for  the  retirement  of  all  prior  lien  mortgage  debts  of  said  MENTs-continued. 
corporation  and  restricting  the  issuance  of  further  bonds 
until  such  time  as  the  income  of  said  corporation  shall  iigfu„^i„g  ^t^e  or 
have  been  at  least  sufficient,  during  the  twelve  months  f^^Yo! rluX^Zt^ 
next  preceding  the  issuance  of  any  additional  bonds,  to  p^J.^V td  "sfriaing 
meet  the  earning  requirements  of  such  corporation  after  l','^^^;'l,%''^ZZ  or 
including    the    additional    bonds    then    proposed    to    be 
issued;  or. 


IV.   An  underlying  or  divisional  closed  mortgage  or  underlying  or  di- 
visional closed  mtge. 
deed  of  trust  of  property  which  forms  a  part  of  the  oper-  or  deed  of  trust  of 

^  ...  property  forming 

ating  system  of  the  corporation  then  owning  said  prop-  part  of  the  operating 

.  ,,      system  of  corporation 

erty.   In  the  case  of  bonds  secured  by  an  underlying  or  di-  then  owning  said 

,   ,  1       i»  1  •  property,  with  in- 

visional  closed  mortgage  or  deed  of  trust,  the  net  income  come  requirements, 

•  •  11111  1  1*1  ''^  specified. 

required  by  this  section  shall  be  based  exclusively  upon 
the  income,  maintenance  charges,  operating  expenses, 
taxes  and  mortgage  indebtedness  of  or  against  the  prop- 
erty covered  by  such  underlying  or  divisional  closed 
mortgage  or  deed  of  trust  or,  if  such  income,  maintenance 
charges  or  operating  expenses  can  not  be  definitely  ascer- 
tained, on  the  proper  proportionate  share  of  such  prop- 
erty in  the  generaJ  income,  maintenance  charges,  operat- 
ing expenses  and  taxes  of  the  corporation  then  owning 
such  property  and  on  the  mortgage  indebtedness  of  or 
against  the  property  covered  by  such  underlying  or  divi- 
sional closed  mortgage  or  deed  of  trust;  provided,  how- 
ever, that  if  the  payment  of  the  bonds  secured  by  such 
underlying  or  divisional  closed  mortgage  or  deed  of  trust 
sheJl  be  guaranteed  or  assumed  by  the  corporation  then 
owning  the  property  securing  the  same,  such  bonds  shall 
be  legal  investments  for  savings  banks,  if  the  net  income 
of  such  corporation  from  all  sources  shall  equal  the 
amount  herein  required,  notwithstanding  any  insufficiency 
of  the  income  derived  from  the  property  covered  by 
such  underlying  or  divisional  closed  mortgage  or  deed 
of  trust  to  meet  the  requirements  of  this  section. 

[811 


§  6 1  BLYTH,  WITTER  &   CO. 

^^^lIgTlYnves'^       '^®  terms,   "street  railroad   corporation,"   "pipe  line 
MENTS— Continued,  corporation,"    "gas    corporation,"    "electrical    corpora- 
tion," "telephone  corporation,"  "telegraph  corporation," 
"Street  railroad  "water   Corporation,"    and    "public   utility,"    when   used 
'^"^wms'd^eflned'^  ^^  paragraph  (g)  of  subdivision  three  of  this  section,  shall 
have  the  meaning  defined  in  the  "public  utilities  act," 

Notes  or  bonds  se         (h)    Notcs  or  bonds  secured  by  first  mortgage  or  deed 

cured   by  first   mort-  ^      '  j  ts    sa 

gage  or  deed  of  trust  ©f  trust  or  Other  first  Hen  upon  real  estate,  imcroved  or 

or  other  1st  lien  on  1-7. 

real  estate,  etc.  with  unimproved ;  provided,  that  the  entire  note  or  bond  issue 

specified  limitations.  *^  ^  ' 

shall  not  exceed  sixty  per  centum  of  the  market  value  of 
such  real  estate,  or  such  real  estate  with  improvements, 
taken  as  security;  and  provided,  further,  in  case  the  said 
note  or  bond  issue  is  created  for  a  building  loan  on  real 
estate,  that  at  no  time  shall  the  entire  outstanding  note  or 
bond  issue  exceed  sixty  per  centum  of  the  market  value 
of  the  real  estate  and  the  actual  cost  of  the  improvements 
thereon  taken  as  security. 

eT^!!'cons'isls'of1n       I"   determining  the  market  value   of  any  real  estate 

"  ?fmber"\anr\he  ^^^er  the  provisious  of  paragraph  (h),  subdivision  three 

included ^hT^fng  °^  *^*s  section,  where  such  real  estate,  improved  or  un- 

market  value,  improved,  consssts  of  oil  or  other  mineral  or  timber  land, 

the  value  represented  by  such  oil  or  other  mineral  or 

timber  shall  not  be  included  in  fixing  such  market  value. 

Redwood  timber  may  Nothing   herein   contained    shall   prevent   savings   banks 

be  included  in  fixing 

market  value,  from  making  loans  secured  by  mortgage  or  deed  of  trust 
upon  lands  wherein  redwood  timber  is  included  in  fixing 
the  market  value  thereof. 

Collateral  trust  bonds        /[\   Collateral  trust  bonds  or  notes  when  secured  by 

or  notes  secured  by — 

either : 

autho°rt\d^orin^        (1)    D^posit  of  bonds  authorized  for  investment  by 
vestment  by  Sec.  of  [i^jg  section  of  a  market  veJue  at  least  fifteen  per  centum 

specified  market  *^ 

^  r  V  ^^^"®'  i^  excess  of  the  par  value  of  the  collateral  trust  bonds  or 

Deposit  of  bonds  so  *^ 

authorized  by  this  notes  issued ;  or, 

Sec,  and  other  se-  '  ' 

curities,  of  combin.-.-d  ^  11.  • 

market  value  and  of        (2)    Deposit  of  bonds  authorized  for  investment  by 

par  value,  as  spaoi-  .  ..«  i«i 

fied.  this  section  and  other  securities  or  a  combined  market 

[821 


SAVINGS  BANKS  §  6 1 

veJue  at  least  twenty  per  centum  in  excess  of  the  par  value  bonds  which  are 

■'    '^  .  ,.11      LEGAL  INVEST- 

of  the  collateral  trust  bonds  or  notes  issued;  provided,  ments— continued. 
that  the  par  value  of  said  collateral  trust  bonds  or  notes 
shall  in  no  case  exceed  the  market  value  of  that  portion 
of  the  security  represented  by  bonds  authorized  for  in- 
vestment by  this  section. 

( 3 )    Deposit  of  any  notes  or  bonds  authorized  for  in-  Deposit  of  any  notes 

,  II  '  '  c  °^  bonds  authorized 

vestment  by  this  section  and  other  securities  of  a  com-  for  investment  by 

iri  !•  •  ^®'^'  ^°"^  other  securi- 

bined  market  value  of  at  least  thirty  per  centum  m  ex-  ties  of  a  combined 

-,  iriiii  11  I         market  value,  as 

cess  or  the  par  value  or  the  coiiaterai  trust  bonds  or  notes  specified. 
issued;  provided,  that  the  par  vsdue  of  such  collateral 
trust  bonds  or  notes  issued  shall  in  no  case  exceed  the 
market  value  of  that  portion  of  the  security  represented 
by  notes  or  bonds  authorized  for  investment  by  this 
section;  provided,  further,  that  the  collateral  pledged 
consist  of  bonds  authorized  for  investment  by  this  sec- 
tion of  the  market  value  of  at  least  seventy-five  per 
centum  of  the  par  value  of  such  collateral  trust  bonds  or 
notes  issued. 

(j)    Bonds  legal  for  Livestment  by  savings  banks  in  Bonds  legal  for  sav- 

I  p  ■tk.i  -^T       t  ««  1  -111  '°^^  bank  Investment 

the  states  of  New  York  or  Massachusetts;  provided,  how-  in  n.  y.  or  Mass., 
ever,  that  as  to  bonds  of  the  character  specified  in  para- 
graph (c)  of  subdivision  three  of  this  section,  such  bonds 
shall  also  conform  to  the  requirements  of  such  paragraph. 

(k)    Notes  or  bonds  secured  by  mortgage  or  deed  of  Notes  or  bonds  se- 

^      '  ^  =>    o  cured  by  mtge.  or 

trust,   payment  of  which  is  guaranteed  by  a   policy  of  ^eed  of  trust,  pay- 

'     »^    ■'  =  J  T-  J  ment  guaranteed  by 

mortgage   insurance,    and    mortgage   participation    certi-  mortgage  insurance 

=*    ="  '  =>    =>        r  r  jj,^  mortgage  par- 

ficates,  issued  by  a  mortgage  insurance  company  in  ac-  ticipation  certs. 
cordance  with  the  provisions  of  chapter  eight  of  title  two 
of  part  four  of  division  first  of  the  Civil  Code. 

"Net  earnings"  as  used  in  this  section  shall  be  deemed  "N^t  earnings"  de- 
to  mean  the  amount  remaining  after  deducting  from  the 
gross  earnings  all  taxes,  maintenance  charges  and  oper- 
ating expenses  except  depreciation  charges,  sinking  fund 
charges  and  interest  on  indebtedness. 

[83] 


§  6 1  BLYTH.  WITTER  &   CO. 

BONDS  WHICH  ARE       Unlcss  herein  otherwise  expressly  provided  the  period 

LEGAL  INVEST-   ,  ,  .    .  .  i  /.  .  ,,         i- 

MENTs— Continued,  for  which  zmy  Corporation  must  have  net  earnings  suf- 
ficient to  qualify  its  bonds  as  an  investment  for  savings 
banks  under  this  section  shzJl  be  either  the  fiscal  year  of 

Period  for  which  any  ,  i«i»  i« 

corporation  must  such  Corporation  next  preceding  the  investment  therein 

have  "net  earnings,"  'is  i  •  i»i 

etc.,  under  Sec.  by  any  savmgs  bank  or  twelve  consecutive  months  in  the 

defined.    .  ,  i*  i      • 

fourteen  months  next  preceding  such  investment. 
No  notes,  bonds,  or       jvJq  notcs,  bonds,  or  other  securities  shall  be  deemed 

other  securities  '  ' 

deemed  to  conform  ^q  come  within  or  conform  to  the  requirements  of  either 

to  requirements  of  ^ 

paragraphs  (f),  (g),  of  paragraphs  (f),  (g),  (h),  or  (i)  of  subdivision  three 

(h),   or    (i)    of  subd.  ..  v/»v&/>v/>  \    / 

3  of  Sec,  unless  as  of  this  sectioH,  unless  such  notes,  bonds  or  other  securi- 

specified.      ,  , 

ties  shall,  in  the  manner  provided  in  this  act,  have  been 
certified  by  the  superintendent  of  banks  to  come  within 
and  fully  conform  to  the  requirements  of  one  or  the  other 
of  said  pzu'agraphs;  provided,  however,  that  any  bamk 
may,  without  such  certification  by  the  superintendent  of 
banks,  purchase  £my  note  or  bond  or  issue  of  notes  or 
bonds  provided  for  in  said  paragraph  (h),  whenever  such 
purchase  constitutes  the  entire  amount  of  notes  or  bonds 
executed  by  the  makers  thereof  and  secured  by  the  same 
real  estate;  (provided,  also,  that  no  savings  bank  shall 
hold  any  such  notes  or  bonds  unless  such  holding  consti- 
tutes the  entire  issue  thereof  at  any  time  outstanding;  and 
provided,  also,  that  nothing  in  this  paragraph  shall  be 
construed  to  permit  savings  banks  to  invest  in  notes  or 
certificates  evidencing  participation  in  any  mortgage  on 
real  estate  unless  in  this  act  specifically  authorized  or  in 
or  on  any  form  of  obligation  secured  by  any  undivided 
interest  in  real  estate  designed  to  distribute  the  obliga- 
tion so  secured). 

[Publishers'  Note  5,  Section  61,  amended  1919: 

The  last  two  provisos  of  the  above  paragraph,  enclosed  in 
brackets,  beginning,  respectively,  "provided  also"  "and  provided 
also"  were  added  in  1919. 

The  purpose  sought  to  be  covered  by  said  provisos  is  to  pro- 
tect savings  banks  in  investments  in  notes  or  bonds  secured  by 
real  estate,  where  the  entire  issue  is  purchased  by  a  single  bank; 
but  it  prevents  any  savings  banks  from  purchasing  any  part  of 
such    an   issue    unless   the   whole   issue   has   been    certified   by   the 

1841 


SAVINGS  BANKS  §  6 1 

Superintendent   of   Banks   as   provided   in  Section   61a   of  the   Act.  ^TP^  WHICH  AKE 

The    amendment    also    prohibits    investment    by    savings    banks    in  menTS Continued. 

notes  secured  by  undivided  interests  in  real  estate,  unless  such  issue 
of  notes  is  first  certified  by  the  Superintendent  of  Banks.] 

The  legality  of  investments  heretofore  lawfully  made  Legality  of  invest- 

.    .       .  I  •  •  /•   .1  ♦  .  •  £  I  ments  lawful  when 

pursuant  to  the  provisions  or  this  section,  or  or  any  law  made,  not  affected 
of  this  state  as  it  existed  on  and  subsequent  to  July  1,  changed^y  am«id- 
1909,  shall  not  be  affected  by  any  amendments  to  this  '"^°*^' 
section  or  this  act;  nor  shall  any  such  amendments  re- 
quire the  changing  of  investments  once  lawfully  made 
under  this  act. 

Any  bonds  authorized  by  this  section  as  a  legal  invest-  Bond  authorized  by 

,,  .-  iiir    ^^'^'  *^  investment — 

ment  for  savings  banks  may  be  earned  on  the  books  of  how  carried  on  books 
said  bank  at  their  investment  value,  based  on  their  mar- 
ket value  at  the  time  they  were  originally  bought,  unless 
the  superintendent  of  banks  shall  require  any  or  all  of 
the  bonds  which  may  thereafter  have  a  market  value  less 
than  the  origineJ  investment  value  to  be  written  down  to 
such  new  market  value  which  shall  be  done  gradually  if 
practicable  and  in  such  manner  as  he  may  determine;  or 
he  may,  by  a  plan  of  amortization  to  be  determined  by 
him,  require  such  gradual  extinction  of  premium  as  will 
bring  such  bonds  to  par  at  maturity. 

(When  it  shall  be  necessary  to  prevent  loss  to  any  sav-  Bonds  of  intrastate 
ings  bank  on  an  obligation  owned  or  on  a  debt  previously  conforming  to  Sec, 
contracted  in  good  faith,  it  may,  with  the  previous  writ- 
ten consent  of  the  superintendent  of  bemks,  purchase  or 
acquire  bonds  of  any  railroad  corporation  incorporated 
under  the  laws  of  the  state  of  California  and  operated 
exclusively  therein,  notwithstanding  such  bonds  do  not 
conform  to  the  requirements  in  this  section  contained; 
provided,  any  bonds  so  purchased  or  acquired  must  be 
sold  for  the  best  price  obtainable  by  any  bank  within  five 
years  after  such  purchase  or  acqubition ) . 

[Publishers'   Note  6,   Section  61,  amended  1919: 

The  above  paragraph,   enclosed  in  brackets,  was  added  in  1919.] 

No    savings    bank    shall    hereafter    purchase    or    loan  classes  of  bonds  u- 

=*  ^  sued  by     public 

money  upon  any  bond,  note  or  other  evidence  of  indebt-  utiuty,"  in  which 

"^       *^  "^  savings  bank  may 

invest,  etc. 

[85] 


§  6  1  BLYTH,  WITTER  &   CO. 

^°^^egaS^ikvest-  edness,  i&sued  by  any  "public  utility,"  subject  to  the  jur- 
MENxs— Continued,  isdiction,  regulation  or  control  of  the  railroad  commission 
of  this  state  under  the  provisions  of  the  "public  utilities 
act,"  approved  December  23,  1911,  and  acts  amendatory 
thereof  or  supplemental  thereto,  unless  each  such  bond, 
note  or  other  evidence  of  indebtedness  was  either: 

(a)  Issued  prior  to  the  taking  effect  of  the  "public 
utilities  act";  or, 

(b)  Issued  under  authority  of  the  railroad  commission, 
in  accordance  with  the  provisions  of  said  act;  or, 

(c)  A  note  issued  for  a  period  not  exceeding  twelve 
months,  in  accordance  with  the  provisions  of  subdivision 
(b)  of  section  fifty-two  of  said  act. 

state  not  to  be  liable       j>Jq  provision  of  this  act,  and  no  act  or  deed,  done  or 

for  payment  of,  or  to  »^  '  ' 

guarantee  regularity  performed  Under  or  in  connection  therewith,  and  no  £ind- 

of  securities  certified  *^  ' 

by  supt.  ing  made  or  certificate  issued  under  any  provision  thereof, 
shall  be  held  or  construed  to  obligate  the  state  of  Cali- 
fornia to  pay,  or  be  liable  for  the  payment  of,  or  to 
guaremtee  in  any  manner  whatsoever,  the  regularity  or 
the  validity  of  the  issuance  of  any  stock  or  bond  certifi- 
cate, or  bond,  note,  or  other  evidence  of  indebtedness 
certified  under  any  provbion  of  this  act,  by  the  superin- 
tendent of  banks. 

Advertising  bonds  as       jj  shall  not  be  lawful  for  any  individual,  firm,  associa- 

legal  investment  for  •'  '  ' 

savings  banks— un-  tion,   bank,   trust   Company,   stock   company,   copartner- 

lawful  unless  under         ^  ^  .  . 

conditions  specified,  ship  or  Corporation  to  advertise  by  newspaper  or  circu- 
lar or  in  any  other  manner  that  any  securities  are  legal 
investments  for  savings  banks  in  this  state  or  to  use  any 
advertisement  v/hich  might  lead  the  public  to  believe 
that  any  securities  conform  to  the  requirements  of  law 
relating  to  investments  by  savings  bemks  unless  such 
securities  are  such  as  are  specified  in  paragraphs  (a), 
(aa),  (b),  (c),  (d),  (e),  (j),  or  (k)  of  subdivision  three 
of  this  section  or  shall,  in  the  manner  provided  in  this 
act,  have  been  certified  by  the  superintendent  of  banks  to 

[861 


SAVINGS  BANKS  §6  1-6  la 


come  within  and  fully  conform  to  the  requirements  of  one  ^egal  invest-^^^ 
or  the  other  of  paragraphs  (f),  (g),  (h),  or  (i)  of  sub-  MENTs-continued. 
division  three  of  this  section  or   unless  such   advertise- 
ment shall  have  been  approved  in  writing  by  the  superin- 
tendent of  banks  prior  to  publishing,  circulating  or  other- 
wise issuing  the  same.     Any  individual,  firm,  association,  Penalty. 
bank,  trust  company,  stock  company,  copartnership  or 
corporation  who  shall  advertise  any  securities  in  viola- 
tion of  the  provisions  of  this  paragraph  shall  be  guilty  of 
a  misdemeanor  and  shall  be  punishable  by  a  fine  not  ex- 
ceeding one  thousand  dollars  or  by  imprisonment  in  a 
county  jail  not  exceeding  one  year  or  by  both  such  fine 
and  imprisonment. 

[Publishers'  General  Note  to  Section  61,  amended  1919: 
The  specific  amendments  or  changes  in  this  section  have  been 
pointed  out  at  the  points  where  they  occur,  in  the  body  of  the 
section.  Speaking  generally,  it  may  be  said  that  this  section  is 
the  governing  section  of  the  Bank  Act  as  regards  savings  bank 
investments.  Jt  is  one  of  the  most  critically  established  laws  in 
any  State  of  the  Union,  and  the  changes  that  have  been  made  are 
designed  to  fortify,  in  such  particulars  as  suggest  the  necessity, 
the  regulations  governing  the  investment  by  savings  banks  in  the 
securities  designated  by  Section  61.  By  the  amendments,  it  will 
be  observed,  banks  are  given  the  further  privilege  to  invest  in 
bonds  or  interest-bearing  notes  or  obligations  of  England  or  the 
United  Kingdom  of  Great  Britain  and  Ireland  or  France  or  the 
Dominion  of  Canada  or  those  for  which  the  faith  and  credit  of 
any  one  or  more  of  said  countries  are  pledged  for  the  payment  of 
principal  and  interest,  and  also  bonds  or  interest-bearing  notes  or 
obligations  of  any  other  foreign  country  or  government  which 
shall  first  have  been  approved  by  the  Superintendent  of  Banks 
in  writing. 

The  law  governing  investments  by  savings  banks  in  notes  or 
bonds  secured  by  real  estate  is  also  strengthened  to  prevent  any 
of  the  changes  which  may  follow  locality  optimism  or  the  specu- 
lative indulgence  of  real  estate  promoters.] 

Section  61a.  The  superintendent  of  banks  shall  have  ^e.^uriUeTprTentef^ 
power,  when  any  issue  of  bonds  or  securities  is  presented  p"^fo^|j"to^^,i^  ^^^^ 
to  him  for  that  purpose,  to  investigate  and  ascertain 
whether  such  bonds  or  securities  come  within  and  fully 
conform  to  all  the  requirements  of  paragraphs  (f),  (g), 
(h),  or  (i)  of  subdivision  three  of  section  sixty-one  of 
this  act,  or  of  either  of  said  paragraphs.  He  may  also 
investigate  and  ascertain  for  what  period  of  time,  and 

[87] 


§  61a  BLYTH.  WITTER  &   CO. 

^°^EGAL  Tnvm^  upon  wh&t  conditions,  any  franchise  granted  to  or  held 

MENTS— Continued,  [jy  gj^y  corporation  issuing  any  such  bonds  or  securities 

will  remain  in  force,  and  any  other  facts  or  conditions 

bearing  upon  the  value  or  sufficiency  of  such  bonds.     The 

On  questions  concern-  superintendent  of  banks  may  accept  and  act  upon  the 

ing  securities,  Supt.  *^  •'  ^  *^  ^ 

may  act  on  legal  ©pinions  and  appraisements  of  any  attorneys,  engineers, 
praisements  present-  qj.  appraisers  which  may  be  presented  by  such  person  or 
corporation,  so  applying,  and  the  reports  of  any  of  the 
executive  officers  of  the  corporation  issuing  such  bonds 
or  securities,  on  any  question  of  fact  concerning  or  affect- 
ing such  bonds  or  securities,  the  security  thereof,  the  fran- 
chise conditions  herein  mentioned,  or  the  financial  condi- 
tion of  the  corporation  issuing  the  same.  In  lieu  of  or  in 
Supt.  may  select  at-  addition  to  such  opinions,  appraisements  and  reports,  the 

torneys,  appraisers  ,  r    i  i  •<•   i  i  i 

and  accountants,  at  Superintendent  of  banks  may,  ir  he  deems  proper,  have 
any  or  all  such  matters  passed  upon  and  certified  to  him 
by  attorneys,  engineers,  appraisers  or  accountants  of  his 
own  selection  at  the  expense  of  the  applicant.      If  the 

If  Supt.  finds  bonds  superintendent  of  banks  shall  find  from  such  investiga- 

or  securities  conform      .1111  ..  1  ••• 

to  Sec.  61,  he  shall  tion  that  the  bonds  or  securities  so  presented  come  within 

so  certify;  otherwise  ir»«  r  11      1  •  e  f         '  1 

certificate  refused,  and  f uily  conf orm  to  ail  the  requirements  of  any  of  sasd 
paragraphs  of  subdivision  three  of  section  sixty-one  of 
this  act,  and  is  satisfied  from  such  investigation  as  to  such 
franchise  conditions,  he  shall  so  certify  unless  for  any 
reason  he  shall  be  of  the  opinion  that  such  bonds  are  not 
a  safe  or  proper  investment  for  savings  banks,  and  in 
such  event  or  if  such  bonds  shall  fail  to  meet  the  require- 
ments of  this  act  such  certificate  must  be  refused.  The 
Supt.  rnay  investigate  superintendent  of  banks  also  shall  have  power  to  inves- 

and  certify  as  to         *^  «  ^ 

sufficiency  of  bonds  jj^ate  and  ascertain  the  status  and  sufficiency  as  invest- 

specined  in  par.  (e),        ** 

of  subd.  3,  Sec.  61.  jnents  for  savings  banks  of  any  bonds  specified  in  para- 
graph (e)  of  subdivision  three  of  section  sixty-one  of  this 
act.  If  upon  such  investigation  it  shall  be  determined  in 
the  opinion  of  the  superintendent  of  banks  that  any  bond 
specified  in  said  paragraph  (e)  of  subdivision  three  of 
section  sixty-one  of  this  act  constitutes  a  proper  invest- 
ment for  savings  banks  he  shall  so  certify. 

[881 


SAVINGS  BANKS §  61a-62 

Any  certificate  issued  by  the  superintendent  of  banks  HIH  Y^^b^.^^^ 
under  authority  of  the  provisions  of  this  section  may  be  ments— continued. 
revoked  at  any  time  in  his  discretion.      Any  certificate 
issued  in  relation  to  notes  or  bonds  specified  in  para-  g^^p^.  may  revoke 
graphs    (f),    (g)    or    (i)    of  subdivision  three  of  section  certificate. 
sixty-one   of   this   act  shall   expire   not  later   than   three 
months  after  the  end  of  the  then  current  fiscal  year  of 
the  corporation  issuing  such  notes  or  bonds. 

Any  such  certificate  so  expiring  may  be  renewed  or  Expiring  certificate 

•'  •  ^  ^  renewable. 

extended  by  the  superintendent  of  banks  without  appli- 
cation therefor  from  such  corporation  or  other  interested 
parties  if  he  shall  be  satisfied  that  the  notes  or  bonds  re- 
ferred to  in  said  certificate  are  in  conformity  with  the 
then  requirements  of  section  sixty-one  of  this  act. 

The  actual  expense  of  investigating  any  issue  of  bonds  Expense  of  investi- 
gating issues,  by 
or  securities  •  so  presented  shall  be  paid  by  the  person,  whom  paid. 

district  or  corporation  presenting  the  same  for  investiga- 
tion, and  the  superintendent  of  banks,  before  making 
such  investigation,  may  require  a  cash  deposit  of  such 
amount  as  he  may  deem  necessary  to  cover  such  expense. 
The  superintendent  of  banks  shall  keep  an  official  list  of  omciaiiistof 

securities. 

all  bonds  and  securities  certified  by  him. 

[Publishers'  Note,  re  Section  61a,  amended  1919: 

In  this  section,  providing  for  the  certification  of  savings  bank 
investments  by  the  Superintendent  of  Banks,  the  amendment  con- 
sists of  an  added  paragraph  to  give  to  the  Superintendent  of  Banks 
power  to  extend  or  renevtr  his  certificate  of  eligibility  of  bonds  of 
savings  banks  without  requiring  an  application  from  any  corpora- 
tion issuing  the  bonds  or  of  any  person  interested  in  them.  This 
change  is  required  because  of  the  fact  that  as  soon  as  the  bonds 
are  certified  and  have  become  investments  in  savings  banks,  the 
issuing  corporation  loses  all  interest  in  the  bond  by  operation  of 
law  and  ceases  to  be  eligible.  The  amendment  is  intended  to  pro- 
tect the  savings  bank  in  the  continued  holding  of  such  bonds.] 

Section  62.      No  savings  bank  shall,   directly  or  indi-  J-J;^f/°/;;;,°;, 
rectly,   deal  or  trade  in  real  or  personal  property  in  any  and^contracting  of 
other  case  or  for  any  other  purpose  than  is  authorized 
by  this  act,  and  shall  not  contract  any  debt  or  liability  for 

[891 


§  62  BLYTH,  WITTER  &  CO. 


any  purpose  whatever  other  than  for  deposits,  except  as 
in  this  section  provided. 

Savings  banks  may        Savings  banks  may  pay  regular  depositors,  v,^hen  re- 

on  request  pay  de-  ■■    i  i  i  i        r  i  •  l      •  ^^.. 

positors  by  draft,  quested  by  them,  by  drart  upon  deposits  to  their  credit 

and  charge  exchange         .   ,        ,      .       ,  •  i       i  r  i 

therefor,  with  their  banks,  and  charge  current  rate  or  exchange 
for  such  drafts. 

Savings  bank  not  to        J^q   savings  bank  shall   borrow  money,    or  pledge   or 

borrow  money  ex-  _    ^  . 

cept  to  meet  demands  hypothecate  any  of  its  securities,  except  to  meet  the  im- 

of  depositors.  i .  ,  i  r   •  i  •  i      i  l       • 

mediate  demands  or  its  own  depositors,  and  then  only  in 
pursuance  of  a  resolution  adopted  by  a  vote  of  a  majority 
of  its  board  of  directors,  duly  entered  upon  their  min- 
utes, wherein  shall  be  recorded  the  ayes  and  nays  upon 
each  vote;  also  with  the  written  approval  of  the  super- 
intendent of  banks,  and  he  shall  have  the  authority  to 
fix  the  amount  to  be  borrowed,  the  amount  and  char- 
acter of  the  securities  to  be  pledged  or  hypothecated. 
Savings  banks  may,  and  the  term  and  rate  of  interest  thereon ;  provided,  that 

to  extent  of  capital  •  i  i  r  i  r  f  •  • 

and  surplus  or  re-  any  savings  bank  may,  for  the  purpose  of  performing  its 

serve,  rediscount  .  .  .         l  .  l  •         l     1 

eligible  assets  with  tunctions  and   transacting  its   business  as  authorized   by 

Federal  Reserve      ,   .  ..  •  i  •   i  i 

bank,  this  act,  rediscount,  with  or  without  guarantee  or  endorse- 
ment, with  the  federal  reserve  bank,  its  acceptances, 
notes  or  any  other  securities,  available  for  rediscount 
w^ith  a  federal  reserve  bank,  in  any  amount  up  to  but  not 
exceeding  its  capital  and  surplus  or  reserve  w^ithout  con- 
sent of  the  superintendent  of  banks,  and  shall  not  be 
considered  as  borrowed  money  within  the  meaning  of 
Savings  bank  may  this  section ;  provided,  also,   that  savings  banks  may,  in 

borrow  and  receive  on 

deposit  public  moneys,  the  manner  authorized  by  law,  and  without  the  previous 

federal   and   state,    as  i         r       i  •  i 

specified,  approval  of  the  superintendent  of  banks,  borrow  the 
public  moneys  of  the  United  States,  the  State  of  Cali- 
fornia, the  counties,  cities  and  counties,  and  towns  of 
said  State  of  California  and  receive  such  public  moneys 
on  deposit;  provided,  also,  that  savings  banks  may,  in 
the  manner  authorized  by  law,  and  without  the  previous 
approval  of  the  superintendent  of  banks,  borrow  postal 
savings  moneys  of  the  United  States,   and  receive  such 

[90] 


SAVINGS  BANKS §  62-63 

postal  savings  moneys  on  deposit;  and  provided,  fur-  dltLaiTnTounrfor''" 
ther,  savings  banks  may  borrow  any  amount,  in  addition  ^"'^^'^^3^  ^onds  Tnd^ 
to  the  amounts  authorized  to  be  borrowed  in  this  section,  other  federal  securi- 

'    ties,   in  manner 

for  the  purpose  of  buying  from  the  United  Slates,  United  specified. 
States  bonds.  United  States  treasury  certificates,  or  notes 
or  obligations  of  the  United  States,  but  only  in  pursu- 
ance of  a  resolution  of  a  majority  of  its  board  of  direc- 
tors,  duly  entered  upon  their  minutes,   and  without  the 
previous   approval    of   the   superintendent   of  banks,    but 
the  fact  of  such  transaction  shall   forthwith  be  reported 
in   writing   to   the   superintendent   of  banks.       No   excess  Excess  loan  to  sav- 
loan  made  to  any  savings  bank  with  or  without  pledge  '"^^ 
of  assets  shall  be  invalid  or  illegal  as  to  the  lender. 

[Publishers'   Note,   re   Section  62,   amended  1919: 

This  section,  which  governs,  restricts  and  guards  the  borrowing  by  savings 
banks,  is  liberalized  to  permit  savings  banks,  to  the  extent  of  their  capital  and 
surplus,  to  rediscount  such  assets  as  they  may  possess  with  a  Federal  Reserve 
bank,  such  assets  necessarily  to  be  eligible  for  such  rediscount;  and  also  to  bor- 
row in  any  amount  for  the  purpose  of  buying  from  the  United  States,  United 
States  bonds.  United  States  treasury  certificates,  or  notes  or  obligations  of  the 
United  States.  The  first  named  amendment  is  designed  to  make  absolutely  liquid 
the  secondary  reserve  of  the  savings  bank,  and  the  second  offers  a  suggestion  of 
assistance  to  the  federal  government  without  impairing  the  character  of  the 
savings   bank.] 

Section  63.      Savings  banks  may  issue  general  certifi-  savings  bank  may 

.^  o  issue  certificates   gen- 

cates  of  deposit,  which  are  transferable,  as  in  other  cases,  erai  and  special,  of 

deposits  on  conditions 

by  indorsement  and  delivery;  may  issue,  when  requested  specified. 
by  the  depositor,  special  certificates,  acknowledging  the 
deposit  by  the  person  therein  named  of  a  specified  sum 
of  money,  and  expressly  providing  on  the  face  of  such 
certificate  that  the  sum  so  deposited  and  therein  named 
may  be  transferred  only  on  the  books  of  the  bank;  pay- 
ment thereafter  made  by  the  bank  to  the  depositor  named 
in  such  certificate,  or  to  his  assignee  named  upon  the 
books  of  the  bank,  or  in  case  of  death,  to  the  legal  rep- 
resentative of  such  person,  of  the  sum  for  which  such 
special  certificate  w^as  issued,  shall  discharge  the  bank 
from  all  further  liability  on  account  of  the  money  so 
paid. 

•  11       .  .T        I  r      1  •         '  11  •  Time  certificates  of 

All    time   certificates   or  deposit,    issued   by  a   savings  deposit  subject  to 
bank,  shall  be  subject  to  the  same  limitations  and  condi-  other  deposits,  etc. 

[91] 


§  63-65 BLYTH,  WITTER  &  CO. 

tions  as  applied  to  other  deposits,  and  notice  thereof 
shall  be  given  by  the  words  "Subject  to  conditions  of 
agreement  with  depositors"  printed  on  the  face  of  the 
certificate  issued. 

Savinrs  tank  to  pre-        Section  64.      Each  savings  bank  must  prescribe  by  its 

scribe   by   its   by-laws  ° 

or  by  contract,  time  by.Jaws,  or  by  contract  with  its  depositors,  the  time  and 

and   conditions   of   re-       •'  '  -^  "^ 

payment  to  depositor,  conditions  on  which  repayment  is  to  be  made  to  deposi- 
tors, except  as  in  this  act  otherwise  provided.  In  all 
cases  the  by-laws  or  contracts  shall  provide  that  notice 
of  at  least  thirty  days  may,  at  the  option  of  any  such 
bank,  be  required  to  be  given  of  intention  to  withdraw 
any  deposit  or  part  thereof,  but  whenever  there  is  any 
call  by  depositors  for  repayment  of  a  greater  amount  than 
the   bank   may   have    disposable    for    that   purpose,    the 

Savings  bank  without  directors  or  officers  thereof  must  not  make  any  new  loan 

capital   stock  shall 

carry  at  least  one-  qj.  investment  of  the  funds  of  the  depositors  or  of  earn- 

tenth   profits  to 

reserve,  j^gs  thereof  Until  such  excess  of  call  has  ceased.  The 
directors  of  any  such  bank  having  no  capital  stock  shall, 
before  the  declaration  of  any  dividend,  carry  at  least 
one-tenth  part  of  the  net  profits  of  such  bank,  for  the 
preceding  half  year,  or  for  the  period  covered  by  said 
dividend,  to  its  reserve  fund.  Subject  to  the  provisions 
of  section  nineteen  of  this  act,  any  losses  sustained  by 
any  such  bank  may  be  charged  to  and  paid  out  of  its 
reserve  fund.  A  larger  reserve  fund  may  be  created  and 
nothing  herein  contained  shall  be  construed  as  prohibi- 
tory thereof.  The  assets  of  any  such  bank  are  a  security 
to  its  depositors.  Any  such  bank  organized  without  cap- 
ital stock,  may  provide  by  its  by-laws  for  the  disposal  of 
any  amount  in  its  reserve  fund  in  excess  of  the  amount 
required  by  section  nineteen  of-  this  act  and  may  also 
provide  for  final  disposal  upon  the  dissolution  of  the 
bank  of  its  reserve  fund  or  the  balance  thereof  remain- 
ing after  payment  of  any  losses  of  such  bank. 

Savings  bank  shall       Section  65.      No  loan  shall  be  made,  for  himself  or  as 

not  loan  to  any  di-  .^—^>-»v^ 

rector  or  officer,  or  ggg^t  or  partner  of  another,  directly  or  indirectly,  to  any 

[92] 


SAVINGS  BANKS §^ 

director  or  officer  of  any  savings  bank  by  such  bank,  or  S,^etc'!'t°x'ce'pt 
on  the  endorsement,  surety  or  guaranty  of  any  such  offi-  l°'^,"„7„^^^tL^tn'' 
cer  or  director,   except  that  loans  may  be  made  to  any  ^^j'^r  hiids'minority 
corporation  in  which  any  director  or  officer  of  such  sav-  ^*<"='^- 
ings  bank  may  own  or  hold  a  minority  number  of  shares 
of   stock,    upon    authorization    of   a    majority   of   all    the 
directors  of  such  savings  bank  and  the  affirmative  vote 
of  all  directors  of  such  savings  bank  present  at  the  meet- 
ing authorizing  such  loan;  provided,  however,   that  such 
loan  shall  in  all  other  respects  conform  to  and  comply 
with    all    other   provisions   of   this   act.      Such   interested  interested  director 

,      ,,  ...  not  to  act  on  such 

director  or  officer  shall  not  vote  or  participate  m  any  man-  loan. 
ner  in  the  action  of  the  board  on  such  loan;  provided, 
also,  that  by  and  with  the  consent  of  the  superintendent  on  loan  by  one 
of  banks  previously  obtained  in  writing,  all  directors  may  dfr°ectors^may"ote, 
vote  upon  such  a  loan  made  by  one  bank  to  another  bank  specififd!'""^ 
where  the  entire  capital  stock  of  one  is  owned  by  or  held 
in  trust  for  the  stockholders  of  the  other  bank  and  where 
all  or  a  majority  of  the  board  of  directors  of  each  of  said 
banks  are  composed  of  the  same  persons.     Such  author- 
ization shall  be  entered  upon  the  records  or  minutes  of 
such  savings  bank.      The  fact  of  making  such  loan,   the  Facts  concerning 

such  loan  to  be  re- 
names  of   the   directors   authorizing  such   loan,    the   cor-  ported  to  Supt. 

porate  name  of  the  borrower,  the  name  of  each  director 
or  officer  of  such  bank  who  is  a  member,  stockholder, 
officer,  or  director  of  the  corporation  to  which  such  loan 
is  made,  the  amount  of  stock  held  by  him  in  such  borrow- 
ing corporation,  the  amount  of  such  loan,  the  rate  of 
interest  thereon,  the  time  when  the  loan  will  become  due, 
the  amount,  character  and  value  of  security  given  therefor 
and  the  fact  of  final  payment,  when  made,  shall  be 
forthwith  reported  in  writing  by  the  cashier  or  secretary 
of  such  savings  bank  to  the  superintendent  of  banks.    No  Loan  to  corporatioa 

°  where  majority  of 

loan  may  be  made  to  any  corporation,  a  majority  of  the  ^**  ^*^y^„°7°f^or, 
stock  of  which  is  owned  or  controlled  by  any  one  or  more  f^^J^*„°^"  °'  °®<=^" 
of  the  directors  or  officers  of  such  savings  bank,  except 
with  the  previous  consent  of  the  superintendent  of  banks. 

[93] 


§  65  BLYTH,  WITTER  &   CO. 

Sayings  bank  may       ^  loan  may  be  made  to  any  agent  or  employee,  other 

loan  to  agent  or  •'  jo  r      j        ' 

employee,  than  an  officer  or  director,  of  any  savings  bank  by  such 
bank  upon  authorization  of  a  majority  of  all  the  direc- 
tors of  such  savings  bank  and  an  affirmative  vote  of  all 
directors  of  such  savings  bank  present  at  the  meeting 
authorizing  such  loan;  provided,  hov/ever,  that  such  loan 
shall  in  all  respects  conform  to  and  comply  with  all  other 
provisions  of  this  act.  Such  authorization  shall  be  en- 
tered upon  the  records  or  minutes  of  such  savings  bank. 
su^h'ioan^o  be°l°e^  The  fact  of  making  such  loan,  the  names  of  the  directors 
ported  to  supt.  authorizing  such  loan,  the  name  of  the  borrower,  the 
nature  of  his  employment,  the  amount  of  such  loan,  the 
rate  of  interest  thereon,  the  time  when  the  loan  will  be- 
come due,  the  amount,  character  and  value  of  the  secur- 
ity given  therefor,  and  the  fact  of  final  payment,  when 
made,  shall  be  forthwith  reported  in  writing  by  the  cash- 
ier or  secretary  of  such  savings  bank  to  the  superintendent 
of  banks.  Any  officer  or  director  of  any  savings  bank, 
who  knowingly  procures  a  loan  from  such  savings  bank, 
contrary  to  the  provisions  of  this  section,  shall  be  guilty 
„.  ,  ,.       ,  of  a  felony.     In  case  of  the  neglect  or  failure  of  the  sec- 

Violations  of  -^ 

section,  retary  or  cashier  of  any  such  bank  to  report  to  the  super- 
intendent of  banks,  as  herein  provided,  any  of  the  facts 
so  required  to  be  reported,  or  in  case  of  the  neglect  or 
failure  of  the  secretary  or  cashier  of  any  such  bank  to 
report  to  the  superintendent  of  banks  any  loan  made 
Penalties.  Contrary  to  the  provisions  of  this  section,  the  bank  shall 
be  liable  therefor  and  shall  forfeit  to  the  people  of  the 
State  of  California  twenty-five  dollars  per  day  for  each 
day,  or  part  thereof,  during  which  such  neglect  or  failure 
continues. 

Loans  to  banks  and       This  section  shall  not  apply  to  any  loan  made  to  a 

religious  corpora- 
tion-, religious  corporation,  club,  or  other  membership  corpor- 
ation of  w^hich  one  or  more  directors,   officers,  agents  or 
employees    of   such    savings   bank    may   be   members    or 
officers,  but  in  which  they  have  no  financial  interest. 

[941 


SAVINGS  BANKS  §  65-66 

Loans  may  be  made   to   any   director,    other   than   an  dj^eeLrother  than 
officer,  directly  or  indirectly,  or  to  any  agent  or  employee  officer,  or  to  agent 

'  -'  ■'  ^o  i^Qj.  employee  of  a 

of  a  savings  bank  on  the  security  of  United  States  bonds,  savings  bank  on 

**  ■'  security  of  U.  S. 

United    States    treasury    certificates,    or    interest-bearing  i*""^^  °J",.°*^" 

•'  ^    U.  S.  obligations 

notes,  or  obligations  of  the  United  States,  or  those  for  as  specified. 
which  the  faith  and  credit  of  the  United  States  are 
pledged  for  repayment  of  principal  or  interest,  or  those 
issued  under  authority  of  the  United  States,  notwithstand- 
ing anything  in  this  section  contained,  and  such  loans 
may  be  made  in  the  usual  manner  of  making  loans  in 
which  no  director  of  such  bank  is  interested. 

[Publishers'   Note,  re  Section  65,   amended  1919: 

The  amendment  to  this  section,  which  establishes  the  limits  upon  any  rela- 
tionship as  between  the  bank,  its  officers,  directors,  agents  or  employees,  pro- 
vides that  by  and  with  the  consent  of  the  Superintendent  of  Banks,  previously 
obtained  in  writing,  all  directors  may  vote  upon  a  loan  made  by  one  bank  to 
another  bank  where  the  entire  capital  stock  of  one  is  owned  by  or  is  held  in  trust 
for  the  stockholders  of  the  other  bank,  and  where  all  or  a  majority  of  the  board 
of  directors  of  each  of  said  banks  are  composed  of  the  same  persons.  This  amend- 
ment is  designed  to  obviate  unnecessary  obstacles  which  the  section  in  itself  and 
without  need  raised,  as  against  certain  transactions  which  may  be  of  benefit  to 
both  of  the  banks  concerned. 

Another  amendment  to  the  section  also  makes  it  possible  for 
a  bank  to  loan  to  any  director,  other  than  an  officer,  directly  or 
indirectly,  and  to  an  agent  or  employee  of  a  savings  bank,  upon 
the  security  of  United  States  bonds.  United  States  Treasury  Cer- 
tiiicates,  or  interest-bearing  notes  or  obligations  of  the  United 
States  or  those  for  which  the  faith  and  credit  of  the  United  States 
are  pledged  for  repayment  of  principal  or  interest  or  those  issued 
under  authority  of  the  United  States.  Borrowing  by  officers,  di- 
rectors, agents,  or  employees  in  savings  banks  is  strictly  restricted 
and  very  carefully  supervised,  but  the  liberalization  of  the  section 
in  no  way  creates  an  injurious  influence  in  the  bank,  as  the 
security  for  the  loan  is  beyond  question  of  the  first  value.] 

Section  66.      No  savings  bank  shall  hereafter  make  any  f^^^X  lo^ns't""* 
loans  to  any  person,   firm,   copartnership  or  corporation  any  person,  etc., 

■'     "^  *  '  exceeding  80' ,-  paiQ- 

to  an  amount  exceeding   fifty  per  centum   of  the  actual  up  capital  and 

^  "^  surplus. 

paid-up  capital  stock  and  surplus  of  such  bank,  or  in  the 
case  of  a  bank  organized  without  capital  stock,  to  an 
amount  exceeding  fifty  per  centum  of  the  reserve  fund 
of  such  bank;  provided,  however,  that  any  savings  bank 
having  a  paid-up  capital  and  surplus   of  less  than   fifty  Exceptions  to 


thousand  dollars,  but  not  less  than  twenty-five  thousand 
dollars,  may  make  any  such  loan  on  real  estate  security 
to  an  amount  not  exceeding  twenty-five  thousand  dol- 
lars; and  provided,  further,  that  any  savings  bank  having 

[95] 


foregoing. 


§  66-67  BLYTH.  WITTER  &   CO. 


a  paid-up  capital  and  surplus  of  less  than  twenty-five 
thousand  dollars  may  make  any  such  loan  on  real  estate 
security  to  an  amount  not  exceeding  its  paid-up  capital 
and  surplus,  if  each  such  loan  in  all  other  respects  con- 
Renewai  or  extension  foj-j^g  to  the  provisions  of  this  act.      The  renewal  or  ex- 

of  loan  nereaiter  ^ 

legally  made  not  jgnsion  of  any  loan  heretofore  legally  made  by  any  sav- 
made."  jj^gg  bank  shall  not  be  construed  to  be  a  "loan  hereafter 
made"  within  the  meaning  of  the  provisions  of  this  sec- 
tion. The  legality  of  investments  heretofore  lawfully 
made  pursuant  to  the  provisions  of  this  act  as  it  existed 
on  and  subsequent  to  July  1,  1909,  shall  not  be  afiFected 

Endorser  deemed  Jjy  jjie  provisions  of  this  section.    For  the  purposes  of 

borrower.  liiiil 

this  section  an  endorser  or  guarantor  shall  be  deemed  to 
be  a  borrower. 

No  savings  bank       Section   67.       1.      No  savings  bank  shall  loan  money 

shall  loan  except  on 

adequate  security,  except  on  adequate  security  of  real  or  personal  property, 

for  limited  period. 

and  no  such  loan  shall  be  made  for  a  period  longer  than 

ten  years.      No  such  loan  shall  be  made  on  unsecured 

notes;   provided,  that  a  savings  bank  may  discount  or 

Savings  bank  may  purchase  bankers*  or  trade  acceptances,  notes,  drafts  and 

discount  or  purchase  ^  ,  , 

bankers'  or  trade  JjiUs  ©f  exchange  of  the  kind  and  chzuracter  and  maturities 

acceptances,  notes,  ^    ^  ,  •ii»ii 

etc,  eligible  for  re-  defined  and  made  eligible  for  rediscount  with  a  federal 

discount  with  Fed.  •  i  i 

Reserve  bank,  and  reserve  bank;  provided,  also,  that  the  same  are  accepted 

complying  with  i»i  i-f  '  t 

specified  require-  or  eudorsed  witHout  qualification  by  a  bank  or  trust 
company,  which  bank  or  trust  company  has  a  paid-in 
capital  of  at  least  one  million  dollars ;  and  provided,  also, 
that  a  savings  bank  may  discount  or  purchase  a  bill  which 
must  comply  with  the  following  requirements: 

Bill  issued  by       (a)    It  Hiust  bc  a  bill  issued  by  a  solvent  individued  or 

solvent  individual, 

firm  or  corporation  firm  or  corporation  engaged  in  mercantile  or  manufac- 

in  mercantile  or  ^  ^  ^  , 

mfg.  business  in  turing  busmess  in  the  United  States  that  makes  statements 

V.  S.,  making  state-  ^  •/•      i  i 

ments  of  condition  ^f  jfj  condition  duly  ascertained  and  certified  to  by  a 

certifled  by  public  •/•      i 

accountant,  public  accountsuit.  Copy  of  such  a  certified  statement 
shall  be  on  file  in  the  office  of  the  savings  bank  discount- 
ing or  purchasing  such  bill  in  a  file  maintained  for  such 
purpose.     Said  statement  shall  have  been  issued  within 

[961 


SAVINGS  BANKS  §  67 

the  preceding  fourteen  months  and  shall  be  the  latest 
issued  by  said  individual  or  firm  or  corporation.  Said  ff°such"statemonl: 
statement  shall  consist  of  a  balance  sheet  showing  quick 
assets,  slow  assets,  permanent  or  fixed  assets,  current  lia- 
bilities and  accounts,  short  term  loans,  long  term  loans, 
capital  and  surplus.  Accompanying  said  balance  sheet 
shall  be  a  copy  of  a  statement  from  the  borrower  or  pub- 
lic accountsint  concerning  the  following: 

( 1 )  The  nature  of  the  business. 

(2)  All  contingent  liabilities  such  as  endorsements  or 
guarantees. 

(3)  Particulars  respecting  any  mortgage  debts  and 
whether  there  is  any  lien  on  current  assets. 

(4)  The  maximum  and  minimum  liabilities  of  the  in- 
dividual, firm  or  corporation  during  the  twelve  months 
previous  to  the  date  of  audit. 

(b)  It  must  be  issued  by  an  individual,  firm  or  cor-  f,i'^eTb?individuai. 
poration  whose  net  worth  is  not  less  than  two  times  the  ^^^°l ""Vl^Jmr 
amount  of  its  outstanding  liabilities,  including  any  con-  requirements  as  to 

•^  '     ^  3  ^  assets  and  liabili- 

tingent  liabilities  arising  from  the  rediscount  of  bills  re-  ties. 
ceivable  or  other  accommodation  endorsements,  nor  less 
than  three  hundred  thousand  dollars.  The  quick  assets 
of  said  individual,  firm  or  corporation,  consisting  of  mer- 
chandise, finished,  raw,  and  in  the  process  of  manufacture, 
accounts  receivable,  bills  receivable,  bonds  or  obligations 
of  the  government  of  the  United  States  at  the  then  market 
value  of  said  bonds  or  obligations  and  cash,  shall  not  be 
less  than  two  times  its  outstanding  quick  liabilities  includ- 
ing any  contingent  liabilities  arising  from  the  rediscount 
of  bills  receivable  or  other  accommodation  endorsements, 
as  shown  by  said  statement. 

(c)  It  must  have   a   maturity  of  not  more   than  six  ^aturltjTnot 

mrknfli«  more  than  6  months. 

[97] 


§67 BLYTH.  WITTER  &   CO. 

Bill  must  have        ( jj  )    jj  myst  havc  ariscii  out  of  actual  commercial  trans- 

ansen  out  of  actual 

commercial  transac-  actions  I  that  is,  be  a  bill  which  has  been  issued  or  drawn 

tions,  etc.  '  '  _ 

for  industrial  or  commercial  purposes  or  the  proceeds  of 
which  have  been  or  are  to  be  used  for  such  purposes. 

Bills  not  eligible;  j^q  JjJji  shall  be  eligible  for  discount  or  purchase  by  a 
savings  bank,  the  proceeds  of  which  have  been  used  or 
are  to  be  used  for  any  of  the  following  purposes: 

(1)  For  speculative       ( 1 )    For  investments  of  a  merely  speculative  character 

investments,  etc.  .  , 

whether  made  in  goods  or  otherwise. 

(2)  For  dealing  in        (2)    Must  not  have  been  issued  for  carrying  or  trading 

stocks,  bonds  or,  iii  i»  •• 

other  investment  m  stocKS,   bonds  or  Other  investment  securities,  except 
IT.  s.  bonds;  must  not  bonds  of  the  govemment  of  the  United  States,  and  must 


cover  investments, 


not  cover  merely  investments. 


(3)  Must  not  be  bill        (3)    Must  not  be  a  bill  of  any  individual,  firm  or  cor- 

of  individual,  etc.,  .  i   •    i     i  i  i      n  i  ii  i*  e 

having  under  pledge  poration  which  has  undcr  pledge  or  hypothecation  any  or 

any  personal  .  , 

assets,  its  personal  assets. 

Bill  defined.  T|,g  ^^^d  "bill,"  when  used  in  this  section,  shall  be 
construed  to  include  notes,  drafts,  or  bills  of  exchange, 
and  the  word  "goods"  shall  be  construed  to  include 
goods,  wares  or  merchandise. 

Savings  bank  pur-       Any  savings  bank  purchasing  or  discounting  such  paper 

chasing  or  discount-     in.  .  ri  •     i     •  i     r  .i  in 

ing  such  paper  shall  shall  have  in  a  hie  maintained  for  the  purpose,  letters 
from  banks  and  merchants  or  mercantile  reports  bearing 
upon  the  credit  and  standing  of  the  person,  firm,  copart- 
nership or  corporation  whose  paper  is  under  discount. 


have  file  showing 

credit  of  parties 

whose  paper  is 

under  discount. 


Combined  total       No  savings  bank  shall  at  any  time  acquire  or  hold,  di- 

amount  held  by  bank  .i-iii'  i  I'l 

of  bankers  and  trade  rectly  or  indirectly,  by  discount  or  purchase,  a  combined 

acceptances,  drafts, 

bills  of  exchange  total  amount  of  bankers    and  trade  acceptances,  drafts 

and  bills  of  charac-  -  ,,,  /•  i  n    i  'ii  r      i  i  t    f  t 

ter  defined  by  Sec,  and  biOs  of  exchange  and  bills  of  the  character  denned 
than  20';  of  bank  s  and  limited  by  this  section,  greater  than  twenty  per  cen- 
tum of  the  deposits  of  such  bank,  nor  shall  any  savings 


Amount  of  bills  of  bank  at  any  time  acquire  or  hold,  directly  or  indirectly. 

Sec.  shall  not  be 

iiter  than  12'/2  9; 

of  bank's  deposits 

[981 


character  defined  by  ^^  ^Jscount  or  purchase,  an  amounl  of  bills,  of  the  char- 

greater than  12/3^^  ^^^^^  defined  and  limited  by  this  section,   greater  than 


SAVINGS  BANKS  §  67 


Such  bankers'  or 
trade  acceptances, 
drafts  and  bills  of 
exchange  from  any- 
one acceptor  shall 
not  exceed  5''/^  of 
capital  and  surplus 
or  reserve  of  bank. 


twelve  and  one-half  per  centum  of  the  deposits  of  such 
bank.  No  savings  bank  shall  at  any  time  acquire  or  hold, 
directly  or  indirectly,  by  discount  or  purchase,  any  such 
bankers'  or  trade  acceptances,  drafts  and  bills  of  exchange 
from  any  one  acceptor  in  an  asnount  which  shall  exceed 
five  per  centum  of  the  capital  and  surplus  or  reserve  of 
such  savings  bank  nor  shall  any  savings  bank  at  any  time 
acquire  or  hold,  directly  or  indirectly,  by  discount  or  pur- 
chase, any  such  bills  of  any  one  person,  firm,  copartner- 
ship or  corporation  in  an  amount  which  shall  exceed  five 
per  centum  of  the  capital  and  surplus  or  reserve  of  such 
savings  bank. 

2.   No  savings  bank  shall  invest  or  loan  an  amount  No  savings  bank 

....    shall  invest  or  lo 


oan 


greater  than  fifty  per  centum  of  its  actual  paid-up  capital  more  than  specified 

•  i-     1  1  percentages  of  its 

and  surplus  on  any  one  note  or  bond  issue  of  the  class  paid-up  capital  and 

.,  V  ,  ....i  surplus,  or  of  its 

specified  in  paragraph  (h),  or  on  the  securities  issued  by  assets,  on  bond  is- 


sues or  securities 


excepted. 


any  one  mortgage  insurance  company  of  the  class  speci-  of  specified  classes. 

.  i/i\/rii*>*  1  r  •  '  Bonds  or  obligations 

fied  in  paragraph  (k)  of  subdivision  three  or  section  sixty-  of  the  us.  and  of  the 

If  e  '  State  or  designated 

one  of  this  act,  nor  more  than  nve  per  centum  or  its  assets  subdivisions  thereof, 

on  any  one  bond  issue  of  any  other  class,  except  bonds  of 

the  United  States,  or  interest-bearing  notes  or  obligations 

of  the  United  States,  or  bonds  of  the  State  of  California, 

bonds  for  which  the  faith  and  credit  of  the  United  States 

or  of  the  State  of  California  are  pledged,  or  bonds  of 

any  county,  city  and  county,  city  or  school  district  in  this 

state,  or  bonds  of  any  irrigation  district  such  as  are  legal 

for  investment  by  savings  banks. 


3.   No  savings  bank  shall  loan  money: 


No  savings  bank  to 
loan  money; 


(a)    On  bonds  of  the  character  specified  in  paragraphs 
(a),  (aa),  (b),  (c)  and  (d)  of  subdivision  three  of  sec-  ^J^^at  nl^of 
tion  sixty-one  of  this  act,  or  on  bonds  of  the  character  ^^^.trslredfied 
specified  in  paragraph  (e)  of  subdivision  three  of  section  g"aphH"se".''6i, 
sixty-one  of  this  act  the  principal  and  interest  of  which  tinier"  same^havr" 

,  »•••  11  •  ill  I'J  market  values  of 

are  to  be  paid  in  whole  or  m  part  by  taxes  levied  upon  specified  percentages 

,..,  iii  1  L    above  amounts 

the  property  m  the  district  issuing  such  bonds,  unless  such  loaned  thereon. 

1991 


§  67  BLYTH,  WITTER  &  CO. 

bonds  shall  have  a  market  value  at  least  ten  per  centum 
in  excess  of  the  amount  loaned  thereon;  or, 

(b)  On  bonds  of  the  character  specified  in  paragraphs 
(f),  and  (g)  or  on  bonds  or  notes  of  the  character  spe- 
cified in  paragraph  (i)  of  subdivision  three  of  section 
sixty-one  of  this  act,  when  eligible  as  investments  for  sav- 
ings banks  pursuant  to  said  section,  or  on  bonds  of  the 
character  specified  in  paragraph  (e)  of  subdivision  three 
of  section  sixty-one  of  this  act  other  than  those  specified 
in  the  preceding  paragraph  of  this  section,  unless  such 
bonds  or  notes  shall  have  a  market  value  at  least  fifteen 
per  centum  in  excess  of  the  amount  loaned  thereon;  or, 

investmeliVrif N ^Y        ^^^    ^  bonds  legal  for  investment  by  savings  banks 
or  Mass.,  unless  J,,  jjjg  states  of  Ncw  York  or  Massachusetts,  unless  such 

market  value  15%  ' 

above  amt.  loaned  fconds   shall  havc   a  market  value  at  least   fifteen   per 

thereon.  "^ 

centum  in  excess  of  the  amount  loaned  thereon;  or. 
On  notes  or  bonds  or       ( J )    On  notes  or  bonds  of  the  character  specified  in 

on  securities  of  char- 
acter specified  in  paragraph    (h)    of  subdivision  three  of  section  sixty-one 

designated  para-  ,  , 

graphs  of  subd.  3  of  of  this  act  when  certified  as  legsJ  investments  for  savings 

Sec.  61,  -when  certi-  »!••  «• 

fied  or  eligible  for  banks  Under  the  provisions  of  section  sixty-one-a  or  on 

savings-bank  invest-  .,  rii  '/"i* 

ment,  unless  market  securities  of  the  character  specified  in  paragraph  (k)  or 

value  at  least  10%         ,,.     ..  ,  r«i  •  i»»iir«  i 

above  amt.  loaned,  subdivision  three  of  Said  section  eligible  for  investment  by 
savings  banks,  unless  such  bonds,  notes  or  securities  shall 
have  a  market  value  at  least  ten  per  centum  in  excess  of 
the  2unount  loaned  thereon;  or. 

On  personal  property,        (e)    On  personal  property  unless  such  personal  prop- 

unless  same  has  lui  i  i  i  /•/• 

market  value  at  erty  shall  have  a  market  value  at  least  fifty  per  centum 

least  50%  above  amt.   , 

loaned,  in  excess  of  the  ajnount  loaned  thereon;  or. 
On  other  bonds,  or  on        (f)    On  Other  bonds,  or  on  capital  stock  of  any  cor- 

capital  stock  of  cor-  .  ,  iii  1.11.III.  Ii. 

poration,  unless  same  poration,  unless  such  Donds  or  stocK  Shall  nave  a  mcurket 

have  market   value  ,  ^  e^r.  .  •  <•    iL  m. 

at  least  50%  above  value  at  least  fifty  per  centum  in  excess  ot  the  amount 

amount  loaned.     Re-  ,  ,      .  •  1      1      1  ».!_     «.  1  l_    11 

striction  on  loan  on  loaned  thcrcon ;  provided,  however,  that  no  loan  shall 
8  oc  .  j^^  niade  upon  the  capital  stock  of  any  bank  unless  such 
bank  has  been  in  existence  at  least  two  years  and  has 
earned  and  paid  a  dividend  on  its  capital  stock. 

[100] 


SAVINGS  BANKS  §  67 

4.  No  savings  bank  shall  make  any  loan  on  security  of  savjn&s  bank  not  to 

^  -'  •'  make  loan  on  real 

real  estate,  except  it  be  a  first  lien,  and  in  no  event  to  estate,  except  u  be 

first  lien,  not  exceed- 

exceed  sixty  per  centum  of  the  market  value  of  any  real  '°f  60%  of  market 

value.    Exception. 

estate  taken  as  security  except  for  the  purpose  of  facilitat- 
ing the  sale  of  property  owned   by  such  savings  bank; 
provided,  that  a  second  lien  may  be  accepted  to  secure  Provisos,  permitting 
the  repayment  of  a  debt  previously  contracted  in  good  ti^nTunder  spec'ified 
faith;  and  provided,  also,  that  any  savings  bank  holding  lorns^nTexTetdin? 
a  first  mortgage  or  deed  of  trust  on  real  estate  may  take  ITtsluTu,  relr 
or  purchase  and  hold  or  loan  upon  another  and  immedi-  and* so %°of ^market 
ately  subsequent  mortgage  or  deed  of  trust  thereon,  but  mortgageX'*^ 
all  such  loans  shall  not  exceed  in  the  aggregate  sixty  per 
centum  of  the  market  value  of  the  real  estate  securing 
the  same;   provided,    further,    that  a   savings  bank   may 
loan  not  to  exceed  ninety  per  centum  of  the  face  value  of 
a  mortgage  which  constitutes  a  first  lien  upon  real  estate, 
but  in  no  event  shall  any  such  loan  exceed  ninety  per 
centum  of  sixty  per  centum  of  the  market  value  of  the 
real  estate  covered  by  said  mortgage  or  deed  of  trust. 

5.  No  savings  bank  shall  loan   to  any  one  borrower  Capitai-stock  loans 

to  any  one  borrower 

on  the  security  of  the  capital  stock  of  any  corporation  an  not  to  exceed  io%, 

and  total  loans  on 

amount  exceeding  ten  per  centum  of  the  capital   stock  stock  of  any  one 

1  f  1  .  11  -111  111  corporation  not  to 

and  surplus  or  such  savings  bank;  provided,  that  all  loans  exceed  ass; ,  of 

bank's  capital  and 

on   the   capital   stock  of  any  one   corporation   shall   not  surplus. 
exceed  in  the  aggregate  twenty-five  per  centum  of  the 
capital  stock  and  surplus  of  such  savings  bank. 

6.  No  savings  bank  shall  purchase,  invest  or  loan  its  Savings  bank  not  to 

.  r    •  1  •  purchase,  invest  or 

capital,   surplus   or   the  money  of  its   depositors,    or  any  loan  any  capital, 

......  J  ^  .      surplus  or  deposits 

part  of  either,   in  mining  shares  or  stock  and  any  presi-  in  mining  shares. 
dent   or  managing  officer  who   knowingly  consents   to   a 
violation  of  any  provision  of  this  paragraph  shall  be  guilty 
of  a  felony. 

[Publishers'  note,  re  Section  67,  amended  1919: 

This  is  one  of  the  most  important  amendments  to  the  Bank 
Act.  California  was  the  first  of  the  American  States  to  permit 
its  savings  banks  to  invest  a  certain  proportion  of  their  assets  in 
liquid  form,  namely,  in  bankers'  acceptances  and  commercial 
paper  of   a   grade   that   is   considered   by   leading   financial   experts 

[101] 


Violation  a  felony. 


§  67-68  BLYTH.  WITTER  &   CO. 

and  bankers  of  the  United  States  to  be  such  that  it  is  practically 
equal  to  cash.  The  amendment  which  made  possible  this  invest- 
ment was  adopted  in  1917  and  restricted  the  savings  banks  to  a 
limit  of  10  per  cent,  of  their  deposits  in  these  liquid  investments. 
Five  per  cent,  of  this  limit  was  to  be  in  bankers'  acceptances  and 
the  other  five  per  cent,  in  commercial  paper.  With  the  advent  of 
the  Federal  Reserve  system  and  its  mobilization  of  reserves  which 
are  intended  to  protect  the  banks  in  the  system  from  panics  and 
from  general  financial  distress,  the  need  of  a  greater  liquid  in- 
vestment, w^hich  becomes  an  actual  secondary  reserve,  was  ap- 
parent, and  the  amendment  increases  this  percentage  of  invest- 
ments, liquid  assets,  to  20  per  cent,  of  the  deposit  liability.  Ail 
of  this  20  per  cent,  may  be  invested  in  bankers'  acceptances  which 
bear  a  low  rate  of  interest;  but  no  more  than  12^3  per  cent,  may 
be  invested  in  commercial  paper.  The  character  of  this  commer- 
cial paper  has  the  endorsement  of  the  Federal  Reserve  system 
itself,  and  is  introduced  in  our  system  in  order  to  give  to  the 
banks  opportunity  to  avail  themselves  of  the  actual  mobilization 
of  their  reserves  in  the  Federal  Reserve  system  and  its  mobiliza- 
tion of  assets  by  banks  in  California.  The  leading  authorities  in 
the  financial  world  consider  that  such  a  modification  of  the  sec- 
tion is  of  vital  moment  in  protecting  savings  banks  from  danger, 
if  not  from  disaster.  Three  of  the  conservative  and  powerful 
states  of  the  Union,  New  York,  Connecticut  and  Massachusetts, 
have  followed  the  lead  of  California  in  this  direction. 

Section  67  is  also  amended  to  harmonize  its  provisions  with 
the  changes  contemplated  in  the  amendment  to  Section  61  of  the 
Bank   Act  relating   to   loaning   and  investment   by   savings   banks.] 

Amount  and  char-        Scction    68.      Evcry   savings   bank   or   savings   depart- 

acter  of  total  13-  r         i  i        i      ii  ii      •  •  •  l 

serves  of  savings  ment  of  a  bank  shall  at  all  times  maintain  total  reserves 

bank  or  savings  bank  .        i  r 

department,  equivalent  to   five  per  centum   or   the  aggregate  amount 

of  its  deposits,  exclusive  of  United  States,  postal  savings 

bank,    state,    county    and    municipal,    and    other    public 

money  deposits,  which  are  secured  as  is  required  by  law; 

at  least   two  and   one-half  per   centum   of  such   deposits 

May  be  maintained  shall  be  maintained  as  reserves  on  hand,  which  shall  con- 
as  reserves  on  hand, 

or  as  reserves  on  de-  sist  of  gold  bulHon,   or  any  fom  of  money  or  currency 

posit  with  reserve 

depositary,  as  spj!ci-  authorized  by  the  laws  of  the  United  States,  and  two 
and  one-half  per  centum  of  such  deposits  may  be  main- 
tained as  reserves  on  hand,  which  shall  consist  of  bonds, 
or  interest  bearing  obligations  of  the  United  States,  of 

gold  bullion,  or  any  form  of  money  or  currency  author- 
ized by  the  laws  of  the  United  States  or  may  be  main- 
tained as  reserves  on  deposit  subject  to  call  with  any 
reserve  depositary  provided  for  in  sections  twenty  and 
forty-three   of   this   act;    provided,    however,    that   all   or 

[1021 


fied. 


SAVINGS  BANKS  §  68 

any  part  of  the  reserves  may  be  deposited,  subject  to 
call,  with  a  federal  reserve  bank  in  the  district  in  which 
such   bank    is   located;    provided,    also,    that   no    savings  savings  bank  or 

bi  .  I  1111  •         1     .  •         dept.  not  required  to 

ank  or  savings  department  shall    be  required   to   mam-  maintain  reserves  on 

,     .  I  1.  r    (■  I  11,1  1   hand  in  excess  of 

tain  reserves  on  hand  m  excess  or  rour  hundred  thousand  $400,000.   when 

dll  11  1  11  i.ii   same  reach  that 

ollars,    and    when    such    reserves    on    hand    reach    that  amt.,  balance  of  the 

..111  f    .      .     1  ■  1        5'';   may  be  kept  as 

amount,   the  balance  or  total  reserves  necessary  to  make  reserves  on  deposit, 
up  the  five  per  centum  may  be  kept  as  reserves  on  de- 
posit,   subject   to   call,    with  any  reserve   depositary   pro- 
vided for  in  sections  twenty  and  forty-three  of  this  act. 

If  any  bank  shall  have  become  a  member  of  a  federal  Amount  and  charac- 
ter of  reserves  re- 

reserve  bank,   it  shall  at  all   times  maintain   the  reserves  quired  of  bank  be- 
coming member  of 
required  by  the  federal  reserve  act  for  time  deposits,  and  Federal  Reserve 

bank. 

in  addition  thereto  shall  be  required  to  maintain  a  re- 
serve of  at  least  two  per  centum  of  its  aggregate  deposits, 
exclusive  of  United  States,  postal  savings,  state,  county 
and  municipal,  and  other  public  money  deposits,  which 
are  secured  as  is  required  by  law^,  which  two  per  centum 
shall  consist  of  gold  bullion,  or  any  form  of  money  or 
currency  authorized  by  the  laws  of  the  United  States. 

If  any  savings  bank  shall  fail  to  maintain  its  total  re-  Penalty. 
serves  in  the  manner  authorized  by  this  section,   it  shall 
be  subject  to  the  penalty  provided  for  in  section  twenty 
of  this  act  for  commercial  banks. 

No  new  loan  shall  be  made  during  any  deficiency  in  No  new  loan  while 

I  I  r^  •  •  1  -111       total  reserves  de- 

the  total  reserves.      Ueposits  w^ith  any  commercial  bank,  iicient. 

or  commercial  department  of  a  bank,  on  open  account,  as 

provided  in  this  section,  shall  be  permitted  and  shall  not 

be  construed  as  loans.      Not  more  than  five  per  centum  Consent  of  Supt. 

.,,  .  .  .  1111111  -1    required  for  savings 

or  the  deposits  or  any  savings  bank  shall   be  deposited  banks  deposits  of 

.   ,  11  -11  r     ^  more  than  5'  r 

With  any  one  bank,  except  with  the  consent  or  the  super-  with  any  one  bank 

,-,,^,  irr  °''  ^^'  f  with  com- 

intendent  or  banks.      INot  more  than  hrteen  per  centum  merciai  banks. 
of  the  deposits  of  any  savings  bank  shall  be  deposited 
with   all   commercial  banks,    except   with   the   consent   of 
the  superintendent  of  banks.     No  savings  bank  or  savings 
department  shall   receive   deposits   of  other   banks  other 

ri031 


§  68-70 BLYTH.  WITTER  &  CO. 

No  savings-bank  or  i]^^jy    savings    dcposits   and    such    deposits   shall    not   be 
other  than  savings  treated  Or  Considered   as   a   part  of   the  reserves  on   de- 

deposits   of   other  ^ 

banks;  same  shall  posit  of  such  depositing  bank,  provided,  the  sum  so  de- 
part of  reserves  on  posited  shall  not  exceed  thirty  per  centum  of  the  paid-in 

deposit  of  deposit- 
ing bank.  Limita-  capital  and  surplus  of  the  depositing  bank  nor  more  than 

tion   upon  sum   so 

deposited,  fifteen  per  centum  of  the  paid-in  capital  and  surplus  of 
the  depositary  bank. 

^"^^il^iw'nlwf       Section   68  J/2  •     Where  a  decedent,  at  the  time  of  his 

may  allow  deposit  '  ^  ' 

of  decedent  to  remain  qj.  j^^j.  Jeath,  left  moneys  on  deposit  with  a  savings  bank, 

in  savings  bank  >  .7  f  »  ' 

where  deposited  and  jj  ghall  be  lawful  for  any  public  administrator,  who  shall 

may  deposit  estate  •'    ^ 

moneys  therein,  become   the   administrator   of   the   estate,    to   allow  such 
deposit  to  remain  in  said  savings  bank,  and  also,  it  shall 
_  be  lawful  for  him  to  deposit  therein  to  the  account  of 

said  decedent,  any  and  all  moneys  of  said  estate  not 
required  for  the  current  expenses  of  administration. 
Effect  of  such  de-  Such  deposit,  whether  made  by  the  decedent  or  a  public 
administrator,  shall  relieve  the  public  administrator  from 
depositing  the  same  with  the  county  treasurer.  Moneys 
so  deposited,  whether  by  the  decedent  or  by  a  public 
Method  o^^th-  administrator,  may  be  drawn  upon  demand  without 
notice,  upon  the  order  of  said  administrator,  counter- 
signed by  a  judge  of  a  superior  court,  when  required  for 
the  purpose  of  administration  or  otherwise. 

[Publishers'  Note,  re  Section  68,   amended  1919: 

In  this  section,  relating  to  the  reserves  which  must  be  maintained  by  savingrs 
banks,  the  changes  made  by  the  amendment  are  those  made  necessary  to  permit 
the  full  admission  of  banks  in  the  State  of  California  into  the  Federal  Reserve 
system.  All  savings  banks  may  place  their  reserves,  or  any  part  of  their  re- 
serves, in  a  Federal  Reserve  bank  in  the  district  in  which  the  savings  bank  is 
located,  and  member  banks,  while  not  being  permitted  to  carry  reserves  de- 
manded by  the  Federal  Reserve  bank  in  lieu  of  those  required  by  the  State  Bank 
Act,  must  carry  those  required  by  the  Federal  system,  and,  in  addition  thereto, 
two   per  cent,   of   their  deposit  liability,   on  hand.] 

Savings  bank  to       Section    69.      Every  savings  bank,  and  the  business  of 

conform  to  Act.  •'  *=■ 

every  savings  department  of  every  other  bank,  must  be 
conducted  under  and  in  accordance  with  the  provisions 
of  this  act. 

Savings  bank  may       Ssction   70.     Evcry  savlngs  bank  shall  have  power  to 

receive  as  depositary,  j  zi  «- 

etc.,  Liberty  bonds  rcceivc  as  depositary,  or  as  bailee  for  safe  keeping  and 

or  other  U.  S.  bonds.  r  j  t  .  .        7 

storage,  Liberty  bonds  or  other  bonds  or  securities  issued 

[1041 


COMMERCIAL  BANKS  §  80 

by  the  United  States  government  for  war  purposes  or 
otherwise. 

[Publishers'  Note,  re  Section  70,  a  new  section  added  in  1919: 
The  enormous  acquisition  of  Liberty  Bonds  by  the  public  has 
created  a  real  situation  as  to  their  safe-keeping,  and  steps  are 
being  taken  in  every  state  to  afford  some  protection  as  against 
theft  and  loss.  This  new  section  allows  every  savings  bank  in  the 
State  to  take  such  bonds  on  deposit  or  as  bailee  for  safe-keeping, 
and  to  arrange  with  the  owner  for  the  collection  and  crediting 
of  the  interest  due  on  them,  and  to  provide  for  their  payment  or 
return  to  their  proper  owners.] 

ARTICLE  III. 

COMMERCIAL  BANKS. 
Section   80.       No    commercial    bank    shall    miake    any  Commercial  banks 

not  to  loan  to  any 

loans,    directly   or    indirectly,    to    any    person,    firm,    co-  borrowers  in  amount 

J        .  which,  (including 

partnership  or  corporation,  in  an  amount  which,  mclud-  extensions  of  credit 

.  •  r  !•  1  _  as  specified),  shall 

ing  therein  any  extension  or  credit  to  such  person,   firm,   exceed  following 

,   .  .  ,  .     ,  -    percentages  of 

copartnership  or  corporation,  by  means  or  letters  or  capital  and  surplus: 
credit,  or  by  acceptance  of  drafts  for,  or  the  discount  or 
purchase  of  the  notes,  bills  of  exchange  or  other  obliga- 
tions of,  such  person,  firm,  copartnership  or  corporation, 
shall  exceed  the  following  percentage  of  its  capital  and 
surplus: 

1 .    Ten    per    centum    without    security,    except    where  (D  lOT'f  without 

,.,!,,.  ,  security. 

such  capital  stock  and  surplus  is  not  more  than  twenty-  (Note  exceptions) 
five  thousand  dollars,  in  which  event  an  amount  not  to 
exceed  twenty  per  centum  of  such  capital  stock  and  sur- 
plus  may  be   loaned   without  security,    and   where   such 
capital  stock  and  surplus  is  greater  than  twenty-five  thous- 
and dollars  and  does  not  exceed  fifty  thousand  dollars, 
a  sum  not  exceeding  five  thousand  dollars  may  be  loaned 
without  security.     Nothing  herein  shall  prohibit  any  com-  fe'^curi^TorVot"^ 
mercial  bank  from   taking  or  receiving  any  kind,   char-  under  toL^su'bd.  ^ 
acter   or  amount   of   security   whatsoever,    either   real    or 
personal,   for  the  protection  of  any  loan  made  under  the 
provisions  of  this  subdivision,   but  no  such   loan   or  any 
part  thereof  shall  be  considered  or  construed  as  a  secured 

[105] 


§  80  BLYTH,  WITTER  &   CO. 


But  no  such  lean  to  Iq^j^   uxilcss   the   wholc   thereof  is  loaned   upon   security 

oe  considered  se- 
cured loan,  unless  -worth  at  least  fifteen  per  centum  more  than  the  amount 

upon  security  at  least 
15';  more  than  amt.   of    guch    loan  I    Or, 
of  loan, 

(2)  (In  addition  to        2.    Fifteen  per  centum,  in  addition  to  the  amount  that 

amt.  loaned  under  ,  ,  ,  ..  ,.,,... 

subd.  1)  15';   upon  may  be  loaned  under  the  provisions  or  subdivision  one 

security  worth  at       ,      ,   .  .  ..  .i  ^    i  .     rti. 

least  15^;  more  than  of  this  section,   upon  secunty  worth  at  least  hrteen  per 

loan  secured.  ,  .  r  l      l  J 

(Note provisos)  centum  more  than  the  amount  or  such  loan  so  secured; 
provided,  the  total  amount  which  can  be  loaned  under 
subdivisions  one  and  two  hereof  can  not  exceed  twenty- 
five  per  centum  in  all ;  provided,  however,  that  a  separate 
note  or  notes  shall  be  taken  for  the  unsecured  loans  and 
a  separate  note  or  notes  shall  be  taken  for  the  secured 
loans,  and  the  secured  and  unsecured  loans  shall  not  be 
combined  in  any  way  within  one  note,  or  notes;  or, 

(3)  259^^  upon  se-        3,    Twenty-five    per    centum    upon    security    v/orth    at 

curity  exceeding  -     . 

loan  secured  at  least  least    fifteen    per   centum    more    than    the    amount    of    its 

(Note  proviso)  loans  SO  Secured;  provided,  however,  that  when  secured 

loans  to  this  amount  or  any  amount  in  excess  of  fifteen 

per  centum  are  made,   then  no  unsecured  loans  shall  be 

permitted  in  addition  to  such  secured  loans;  or, 

407o  if  loan  on  com-        ^     Forty  per   centum,    provided   such   loans   are   upon 

mercial  paper,  j     tr  >     i- 

owned  by  negotiator   commercial    or   business    paper    actually    owned    by    the 

aorsed  without  '■      '■ 


mercial  paper, 
Iby 
endor: 

(Note  provisos) 


limitation,  pgrsou  negotiating  the  same  to  such  bank,   and   are   en- 


dorsed by  such  person  without  limitation;  provided,  how- 
ever,   that   in   addition   to   the   amounts   permitted   to   be 
—re  combinati  ns  loaned  by  Subdivisions  one,   two  or  three  of  this  section, 

loans  under  subd.  •' 

4  and  subd.  1,  2,  or  3.  -^j^  amount  may  be  loaned  on  the  securities  fixed  by  sub- 
division four  of  this  section,  which  taken  with  the  amounts 
so  permitted  by  said  subdivisions  one,   two  or  three  will 

—restrictions  of  Sec.        j^  exceed  forty  per  centum;  provided,  also  that  the  re- 

not  applicable  to  j    f  '    ^ 

drafts  etc.  with  gtrictious   Under   this   section   shall   not   apply   to   bills   of 

B/Ls  attached,  etc. 

exchange  or  drafts,  with  bills  of  lading  attached,  drawn 
in  good  faith  against  actual  existing  values;  provided, 
further,  that  any  commercial  bank,  having  first  obtained 
in  writing  the  consent  of  the  superintendent  of  banks 
so  to  do  and  under  such  conditions  and  regulations  as 

[1061 


COMMERCIAL  BANKS  §  80 

may  be  prescribed  by  him,  may  accept  drafts  or  bills  of  ~ecified^characte°/ 
exchange    drawn    upon    it    running    for   a    period    of    not  5°'"  p'^™^  not  longer 

^  ^  ^  I  than  SIX  montns, 

lonerer   than   six  months,    but   no   commercial   bank   shall  i^^^^ed  in  aggregate 

=  amt.,  and  to  drawers 

accept   such   drafts   or   bills   of   exchange    in    an    amount  '"  specified  busi- 

^  ^  ness,  etc, 

greater  at  any  time  in  the  outstanding  aggregate  than  one- 
half  of  its  capital  and  surplus;  but  such  acceptance  or 
acceptances  must  be  drawn  by  a  person,  firm,  copartner- 
ship or  corporation  engaged  in  agricultural,  industrial  or 
commercial  business  directly  connected  with  the  produc- 
tion, manufacture,  purchase,  sale  or  consignment  of  the 
goods  involved  in  the  transaction  in  which  the  accept- 
ance originated ;  provided,  however,  that  no  such  accept-  —re  limit  in  amount 

-.  of  acceptances  to 

ance  or  acceptances  to  any  one  person,   hrm,   copartner-  any  one  person,  firm, 

,   .  •  1      11  1  £      1        corporation,  etc. 

ship  or  corporation  shall  exceed  ten  per  centum  or  the 
capital  and  surplus  of  such  bank. 

None  of  the  limitations  or  restrictions  contained  in  the  ^°  limitations  in 

previous  subds, 

previoias  subdivisions  of  this  section  shall  apply  to  loans,  ^ppiy  to  loans,  etc., 

■^  .  .  secured  by  Liberty 

discounts  or  other  extensions  of  credit  secured  by  Liberty  i^onds,  or  other  u.  s. 

bonds,  etc. 

bonds  or  by  other  bonds  or  securities  issued  by  the 
United  States  government,  if  the  market  vsdue  of  such 
Liberty  bonds  or  other  securities  exceeds  by  ten  per 
centum  the  amount  of  any  such  loan,  discount  or  other 
extension  of  credit. 

Loans    which    are    made    upon    security    available    for  i-oans  by  commercial 

bank  on  security  for 

loans  in  a  savings  bank  may  be  made  in  a  commercial  savings-bank  loans, 

deemed  secured 

bank  upon  the  same  margin   of  security  as  is  permitted  loans  under  sec. 
to  savings  banks  anything  in  this  section  to  the  contrary 
notwithstanding,  and  all  such  loans  shall  be  deemed  to 
be  secured  loans  w^ithin  the  meaning  of  this  section. 

In   computing  the  total   liabilities   of  any   person   to   a  Total  liabilities  of 

.'I  gjiy  pgi-son  to  corn- 

commercial  bank  there  shall  be  included  all  liabilities  to  merciai  bank,— how 

computed. 

the  bank  of  any  copartnership  or  unincorporated  associa- 
tion of  which  he  is  a  member,  and  any  loans  made  for 
his  benefit  or  for  the  benefit  of  such  copartnership  or  un- 
incorporated association;  of  any  firm,  copartnership  or 
unincorporated  association  to  a  commercial  bank  there 

[1071 


§  80-8!  BLYTH.  WITTER  &   CO. 

shall  be  included  all  liabilities  of  its  individual  members 
and  all  loans  made  for  the  benefit  of  such  copartnership 
or  unincorporated  association  or  any  member  thereof; 
and  of  any  corporation  to  a  commercial  bank  there  shall 
be  included  all  loans  made  for  the  benefit  of  the  cor- 
poration. 

[Publishers'  Note,  re  Section  80,  amended  1919: 
This  section  is  the  governing  section  for  loans  made  by  com- 
mercial banks.  The  only  change  in  the  section  is  to  permit  loans 
to  any  director,  other  than  an  officer,  directly  or  indirectly,  or  to 
any  agent  or  employee  of  a  commercial  bank,  on  the  security  of 
United  States  bonds,  United  States  Treasury  Certificates,  or  in- 
terest-bearing notes  or  obligations  of  the  United  States  or  those 
for  which  the  faith  and  credit  of  the  United  States  are  pledged  for 
repayment  of  principal  and  interest  or  those  issued  under  author- 
ity of  the  United  States.  The  amendment  ^vas  made  upon  the 
theory  that  the  security  offered  by  the  interest-bearing  obligations 
of  the  United  States  offers  no  hazard  to  the  banks  accepting 
them.] 

Loans  upon  corporate       Section    8  I .      No  loan  shall  be  made  by  any  commer- 

securities,  payment 

of  v?hich  undertaken,  cial  bank  upon   the  securities  of  one   or  more  corpora- 

severally,  by  two  or      _  r        i   •    i      •  i  i  •  i       i 

more  persons,  firms,  tions,   the  payment  or  which  IS  undertaken,  m  whole  or 

or  corporations, —  .  ii         i  •     •       i         i  •      t 

forbidden,  if  made  in  part.  Severally,  but  not  jomtly,  by  two  or  more  mdi- 

under  conditions       •  i        t        r 

specified,  viduals,  nrms,  or  corporations: 

(a)  If  the  borrowers  or  underwriters  be  obligated 
absolutely  or  contingently  to  purchase  the  securities,  or 
any  of  them,  collateral  to  such  loan,  unless  the  bor- 
rowers or  underwriters  shall  have  paid  on  account  of  the 
purchase  of  such  securities  an  amount  in  cash,  or  its 
equivalent,  equal  to  at  least  twenty-five  per  centum  of 
the  several  amounts  for  which  they  remain  obligated  in 
completing  the  purchase  of  such  securities; 

(b)  If  the  commercial  bank  making  such  loan  be 
liable,  directly  or  indirectly,  or  contingently,  for  the  re- 
payment of  such  loan  or  any  part  thereof; 

(c)  If  its  term,  including  any  renewal  thereof  by  agree- 
ment, express  or  implied,  exceed  the  period  of  one  year; 

(d)  Or  to  an  amount  under  any  circumstances  in  ex- 
cess of  twenty-five  per  centum  of  the  capital  and  surplus 
of  the  commercial  bank  making  such  loan. 

[108] 


COMMERCIAL  BANKS  §  82 

Section   82.     Every  commercial  bank  hereafter  organ-  fe^^uirements*^^ 
ized  must  have  paid  up  in  cash  a  capital  stock  of  not  less 
than, 

(a)  Twenty-five  thousand  dollars  if  its  principal  place  Population  not  over 

,.  11-1  V-r   5.000— $25,000. 

of  business  is  located  in  any  locality  the  population  of 
which  does  not  exceed  five  thousand  persons; 

(b)  Fifty   thousand    dollars    if   its   principal    place    of  5, oeo  to  25,000 

.  .  .  ,  ,       .  r         1   •    1     population — $50,000. 

busmess  is  located  m  any  city  the  population  or  which 
is  more  than  five  thousand  persons  but  does  not  exceed 
twenty-five  thousand  persons; 

(c)  One    hundred    thousand    dollars    if    its    principal  25,000  to  100,000 

^     '  _  _  _  _  .  population— $100,000. 

place  of  business  is  located  in  any  city  the  population  of 
which  is  more  than  twenty-five  thousand  persons  but 
does  not  exceed  one  hundred  thousand  persons; 

(d)  Two    hundred    thousand    dollars   if   its   principal  100,000  to  200,000 

,.  r  population — $200,000. 

place  of  business  is  located  in  any  city  the  population  of 
which  is  more  than  one  hundred  thousand  persons  but 
does  not  exceed  two  hundred  thousand  persons; 

(e)  Three  hundred   thousand   dollars   if  its   principal  goo'olfo^sgoo^oo'"^ 
place  of  business  is  located  in  any  city  the  population  of 

which  is  more  than  two  hundred  thousand  persons. 

The    foregoing    classification    shall    not    apply   to    any  Foregoing  classifica- 
tion not  retrospec- 

commercial  bank  already  in  existence  which  has  received  tive  nor  applicable 

.to  banks  included 

its  certificate  to  do  a  banking  business  from  the  superin-  by  annexation,  etc., 

,,.|in  larger  city. 

tendent  of  banks;  nor  to  any  bank  the  location  of  which 
shall  have  been  included  by  annexation  or  consolidation 
within  the  limits  of  a  city  of  a  class  requiring  a  larger 
capitalization,   but  no  bank  thus   excepted   shall  be   per-  But  no  excepted 

bank  may  open  new 

mitted  to  establish  any  new  branch  office  as  provided  in  branch,  nor  remove 

place  of  business 

section  nine  of  this  act  or  to  remove  its  place  of  business  from  pre-annexation 

1   .        '     1  .        location  until  it 

from  the  original  limits  of  the  city  or  township  wherein  have  capital  required 

.  of  unexcepted  banks. 

it  was  located  prior  to  such  annexation  or  consolidation 
until  it  shall  have  the  capital  required  of  banks  in  such 
city    not   within    said    exception.       Such    excepted    banks 

[109] 


§  82-83  BLYTH,  WITTER  &  CO. 

Decrease  and  ^^^^ease  j^^y  not  in  any  case  decrease  their  capital  stock  but  may 

excepted  banks,  increase  the  same  in  the  manner  provided  by  law  to  an 

amount  either  greater  or  less  than  that  required  of  banks 

in   such    city   not   within   said    exception;    provided,    that 

nothing  herein  shall  be  construed  to  affect  the  provisions 

Provisions  of  Sec.  of  section  nineteen  of  this  act  relative  to  the  proportion 

19  re  proportion  of  _ 

capital  and  surplus  of  capital  and  surplus  to  deposits  or  of  section   twenty- 

to  deposits,  etc.,  ri-  i-  i  -i  i  -ir 

net  affected  by  Sec.  three  of  this  act  relative  to  the  capital  stock  required  of 
Population  provisions  banks  doing  a  departmental  business.     The  provisions  of 

applicable  to  banks  .  r      i   •  i       •  i      11 

organized  under  Sec.  section  tw^enty-three  of  this  act,  as  to  population,  shall 
apply  to  any  bank  organized  under  the  provisions  of  this 
section. 

commi  bank  not  to        Section    83.     No  loan  shall  be  made  for  himself  or  as 

loan  to  or  on  endorse- 
ment of  an  officer—  agent  or  partner  of  another,  directly  or  indirectly,  to  any 

but  may  loan  to  cor-  •    1    l  1      i  ill  1 

poration  of  which  oihcer  ot  any  commercial  bank  by  such  bank,  or  on  the 

of&cer  is  minority  r  1  rr 

stockholder,  director,  endorsement,    surety,    or    guaranty    or   any    such    ofncer; 

etc. ;  and  to  director  •  1      i        1  1  1  1  •  r 

other  than  officer,  or  provided,   that  a  loan  may  be  made  to  a  corporation  or 

firm,   corp'n,   etc.,        1   .    1  rr  c  -ill 

of  which  such  direc-  w^hich   any   othcer   or   a   commercial    bank,    proposing   to 

tor  is  member,  etc.;  ,  ,-,  .  ..  1111  t  rr 

and  loan  and  extend  make  such  loan,  IS  a  minority  stockholder,  director,  om- 

credit  to  member,  1  •  ,  i.  , 

not  officer,  of  ad-  cer,  agent  or  employee.     Loans  to  any  director,  agent  or 

commi  bank,  or  employee  Other  than  an  officer,  or  to  any  firm,  copartner- 
firm,  corp'n,  etc.,      1.  ,•  ri-i  Ti 

with  which  such  ship  or  Corporation  or  which  any  director,  agent  or  em- 
member  is  connected.      1  ili.l_  ai  •  L  1.II-IJ 

ployee  other  than  an  omcer  is  a  member,  stockholder, 
director,  officer,  agent  or  other  employee,  or  to  any 
person,  firm,  copartnership  or  corporation  on  the  en- 
dorsement, surety,  or  guaranty  of  any  such  director  other 
than  an  officer,  agent  or  other  employee,  can  be  made 
by  any  commercial  bank;  and  provided,  further,  that  a 
loan  may  be  made  or  a  line  of  credit  may  be  given  to 
any  member  of  an  advisory  board  or  body  of  a  commer- 
cial bank,  not  otherwise  an  officer  of  such  bank,  or  a  loan 
Conditions  govern-  niay  be  made  to  any  firm,   copartnership  or  corporation 

ing  above  loans.  -'  ./  >  i-  i-  x- 

of  which  any  member  of  such  advisory  board  or  body  is 
a  member,  stockholder,  director,  officer,  agent  or  other 
employee,  or  to  any  person,  firm,  copartnership,  or  cor- 
poration on  the  endorsement,  surety,  or  guaranty  of  any 
such  member  of  such  advisory  board  or  body  upon  such 

[110] 


COMMERCIAL  BANKS  §  83 


conditions  as  are  herein  fixed  for  a  loan,  directly  or  in- 
directly, or  a  line  of  credit  and  the  report  thereof  to 
any  director  of  such  bank.  Loans  herein  authorized 
can  be  made  only  on  authorization  of  or  confirmation 
within  thirty  days  after  making  such  loan,  by  a  majority  Conditions  govern- 

,  _.  .  ing  above  loans. 

of  all  the  directors  of  such  bank  and  the  afhrmative  vote  (Cont'd.) 
of  all  directors  of  such  bank  present  at  the  meeting 
authorizing  or  confirming  such  loan.  Such  interested 
director  shall  not  vote  or  participate  in  any  manner  in 
the  action  of  the  board  on  such  loan;  provided,  that  by 
and  with  the  consent  of  the  superintendent  of  banks  pre- 
viously obtained  in  writing,  all  directors  may  vote  upon 
such  a  loan  made  by  one  bank  to  another  bank  where 
the  entire  capital  stock  of  one  is  owned  by  or  held  in 
trust  for  the  stockholders  of  the  other  bank  and  w^here 
all  or  a  majority  of  the  board  of  directors  of  each  of 
said  banks  are  composed  of  the  same  persons.  The 
board  of  directors  of  any  such  bank  may  fix  the  total 
amount  of  credit  that  may  at  any  one  time  during  the 
twelve  months  next  succeeding  be  given  to  any  director, 
agent,  or  other  employee,  other  than  an  officer,  or  to  any 
firm,  copartnership,  or  corporation  in  which  any  director, 
agent,  or  other  employee  other  than  an  officer  is  a  mem- 
ber, stockholder,  director,  officer,  agent  or  other  em- 
ployee or  to  any  corporation  of  which  any  officer  of  a 
commercial  bank,  proposing  to  fix  such  total  amount  of 
credit,  is  a  minority  stockholder,  director,  officer,  agent 
or  employee,  and  any  or  all  loans  made  within  or  up  to 
the  total  amount  of  such  authorized  credit  may  at  any 
time  during  said  twelve  months  be  renewed  from  time 
to  time,  in  whole  or  in  part,  by  the  officers  of  the  bank 
without  any  further  vote  or  action  on  the  part  of  the 
board  of  directors.  Each  such  authorization  shall  be 
entered  upon  the  records  or  minutes  of  said  bank.  No 
director  shall  vote  or  participate  in  anj"^  manner  in  such 
action  of  the  board  fixing  the  total  amount  of  credit  that 
may  at  any  one  time  be  given  to  himself  or  to  any  firm, 

[111] 


§  83 BLYTH.  WITTER  &  CO. 

copartnership  or  corporation   in  which  he  is  a  member, 

stockholder,    director,    officer,    agent  or   other   employee. 

Facts  concerning  The  fact  of  making  such  loan,  the  name  of  the  director 

such  loans  to  be  re-  ,         .    .  •     <  •  r     i  i  • 

ported  to  Supt.  authorizing  such  loan,  the  name  of  the  director,  agent  or 
employee,  obtaining  such  loan,  or  the  name  of  the  firm, 
copartnership  or  corporation  in  which  such  director, 
agent  or  employee  is  interested,  or  the  name  of  the  cor- 
poration, of  which  any  officer  of  a  commercial  bank  is  a 
minority  stockholder,  director,  officer,  agent  or  employee, 
obtaining  such  loan,  the  amount  of  such  loan,  the  rate 
of  interest  thereon,  the  time  when  the  loan  will  become 
due,  the  amount,  character  and  value  of  security  given 
therefor,  if  any,  and  the  fact  of  final  pajonent  when  made 
shall  forthwith  be  reported  in  writing  by  the  cashier  or 
secretary  of  such  bank  to  the  superintendent  of  banks. 
In  case  a  loan  is  made  to  a  corporation  there  shall  be  re- 
ported in  the  same  manner  the  name  of  each  director 
and  officer  of  such  bank  who  is  a  member,  stockholder, 
director,  officer  or  employee  of  such  borrowing  corpora- 
tion and  the  amount  of  stock  held  by  him  in  such  borrow- 
Provisions  of  Sec.  jng  corporation.    All  the  provisions  of  this  section  relating 

as  to  reports  apply  .  in 

to  granting  of  credit,  to  rcports  shall  apply  to  the  granting  or  credit  and  all 

etc. 

loans  made  under  any  credit  given  and  payments  made 

thereon  shall  also  be  reported  immediately  after  the  same 

Report  to  be  made  is  made.      In  case  of  a  loan  made  without  the  previous 

of  loan  without  pre-  ...  rii-  ir  c  ^  ■ 

vious  authorization,  authorization  of  the  directors,  the  fact  of  making  such 
loan  shall  forthwith  be  reported  and  the  action  of  the 
board  of  directors,  in  confirming  or  refusing  to  confirm 
such  loan  within  thirty  days  thereafter,  and  the  fact  of 
final  payment  when  made  shall  be  reported  in  the  same 
manner  as  herein  required  for  loans  made  under  previous 

Procuring  loan  con-  authorization.     Any  officer,  director,  agent,  or  employee 

trary  to   section,        .  •    i    i  i  i  i  •        i  i 

felony,  ot  a  Commercial   bank,   who  knowingly  procures  a   loan 

from  such  commercial  bank,  contrary  to  the  provisions  of 

Penalty  for  failure  ji^ig  section,  shall  be  guilty  of  a  felony.      In  case  of  the 

to  report.  ^  ^ 

neglect  or  failure  of  the  secretary  or  cashier  of  any  such 
bank  to  report  to  the  superintendent  of  banks,  as  herein 

fll21 


COMMERCIAL  BANKS  §  83-84 

provided,  any  of  the  facts  so  required  to  be  reported,  or 
in  case  of  the  neglect  or  failure  of  the  secretary  or 
cashier  of  any  such  bank  to  report  to  the  superintendent 
of  banks  any  loan  made  contrary  to  the  provisions  of 
this  section,  the  bank  shall  be  liable  therefor  and  shall 
forfeit  to  the  people  of  the  state  of  California  twenty-five 
dollars  per  day  for  each  day,  or  part  thereof,  during 
which  such  neglect  or  failure  continues. 

This  section  shall   not  apply  to   any   loan   made   to   a  Loans  to  religious 

...  .  1  I   •  corporations,  etc., 

religious    corporation,    club,    or    other    membership    cor-  when  section  not  ap- 

^        ,   .    ,  ^  plicable  thereto. 

poration  or  which  one  or  more  directors,  officers,  agents 
or  employees  of  such  commercial  bank  may  be  members 
or  officers  but  in  which  they  have  no  financial  interest. 

No  loan  may  be  made  to  any  corporation,  a  majority  i-oans  to  corporation, 

■where  majority 

of  the  stock  of  which  is  owned  or  controlled  by  any  one  stock  owned,  etc., 

by  directors,  etc.,  of 

or  more  of  the  directors  or  officers  of  such  commercial  tank— restricted. 
bank,    except  with  the   previous  consent  of   the  superin- 
tendent of  banks. 

Loans  may  be  made  to  any  director,  other  than  an  i-oa"  may  he  made 

to  director  (not 

officer,   directly  or  indirectly,   or   to   any   agent   or   em-  officer)  or  agent  or 

employee  of  comm  1 

ployee  of  a  commercial  bank,  on  the  security  of  United  bank,  on  security  of 

^  U.S.  honds  or  ob- 

States  bonds.  United  States  treasury  certificates,  or  in-  ligations. 
terest-bearing  notes,  or  obligations  of  the  United  States, 
or  those  for  which  the  faith  and  credit  of  the  United 
States  are  pledgerl  for  repayment  of  principal  or  in- 
terest, or  those  issued  under  authority  of  the  United 
States,  notwithstanding  anything  in  this  section  con- 
tained, and  such  loans  may  be  made  in  the  usual  man- 
ner of  making  loans  in  which  no  director  of  such  bank  is 
interested. 

[Publishers'   Note,   re  Section  83,   amended  1919: 

The  amendment  of  this  section  occurs  in  the  last  paragraph,  and  is  identical 
in  phrasing  with  one  of  the  amendments  made  to  Section  65  of  the  Bank  Act; 
the  application  here  is  to  commercial  banks,  while  that  of  Section  65  is  to  savings 
banks.  The  amendment  removes  the  limitation  made  upon  loans  granted  to 
directors,  agents  or  employees  of  a  commercial  bank  on  the  security  of  certain 
obligations  of,  or  issued  under  the  authority  of,  the  United  States,  as  specified  in 
the  last  paragraph  of  the  section.] 

Section    84.      No    commercial    bank    shall     invest    an  Limited  investment 

permitted  in  bank 

amount  exceeding  its  paid-up  capital  and  surplus  in  the  premises. 

[113] 


§  84-90 BLYTH.  WITTER  &   CO. 

lot  and  building  in  which  the  business  of  the  bank  is  car- 
ried on,  furniture  and  fixtures,  vaults  and  safe  deposit 
vaults  and  boxes  necessary  or  proper  to  carry  on  its 
banking  business;  and  hereafter  the  authority  of  a  two- 
thirds  vote  of  all  the  directors  shall  be  necessary  to 
authorize  the  purchase  of  such  lot  and  building  or  the 
construction  of  such  building. 

Supt  may  limit  de-       Section   85,      The  superintendent  of  banks  shall  have 

posits  with  other  t-i  rrii  ii 

commercial  bank  power  to  limit  the  amount  or  funds  that  may  be  de- 
posited by  any  commercial  bank  with  any  other  com- 
mercial  bank. 

ARTICLE  IV. 
TRUST  COMPANIES. 
What  constitutes  a        Section   90.     Any  corporation  which  has  been  or  shall 

trust  company.   ,.  iiii  ri-  i-i- 

be  incorporated  under  the  laws  or  this  state,  which  is 
authorized  by  its  articles  of  incorporation  to  act  as  exe- 
cutor, administrator,  guardian  of  estates,  assignee,  re- 
ceiver, depositary  or  trustee,  under  appointment  of  any 
court  or  by  authority  of  any  law^  of  this  state,  or  as 
trustee  for  any  purpose  permitted  by  law,  which  has  its 
principal  place  of  business  in  a  city  in  which  the  popula- 
tion does  not  exceed  one  hundred  thousand  persons  and 
As  to  trust  company  w^hich  has  a  Capital  of  not  less  than  one  hundred  thousand 
piace*o'f"busin"s's^^n  dollars  actually  paid  in,  in  cash,  assigned  to  or  available 

city  of  population    r  .1  £  1        j."  1_        •  •  L 

not  over  100^000  and  lor  1"^  purpose  ot  Conducting  business  in  any  such 
^*'  notTe^'s^than  Capacity,  or  trust  business  of  any  character  permitted  by 
to  trust  busin^s^s.  l^w,  and  which  has  made  with  the  state  treasurer  the 
deposit  of  money  or  securities  of  the  character  and  in 
the  amount  required  by  the  terms  of  section  ninety-six 
of  this  act,  and  w^hich  has  received  from  the  superintend- 
ent of  banks  the  certificate  of  authority  required  by  the 
terms  of  section  one  hundred  twenty-seven  of  this  act, 
to  transact  such  business,  and  any  corporation  which  has 
been  or  shall  be  incorporated  under  the  laws  of  this 
state,  which  is  authorized  by  its  articles  of  incorporation 

[114] 


TRUST  COMPANIES  §  90 

to  act  as  executor,  administrator,  guardian  of  estates,  as- 
signee, receiver,  depositary  or  trustee,  under  appointment 
of  any  court  or  by  authority  of  any  law  of  this  state,  or 
as  trustee  for  any  purpose  permitted  by  law,  which  has  As  to  trust  company 

.  ••11  CU        •  •  •i       •  U-    U    lU  having  principal 

its  principal  place  or  business  in  a  city  m  which  the  popu-  place  of  business  in 

1.  J  UJJ*.L  J  JL^L    *'*y  °'  population 

lation  exceeds  one  hundred  thousand  persons  and  which  exceeding  100,000  and 
has  a  capital  of  at  least  two  hundred  thousand   dollars  at\east'$YooVo 

.11  •!    •         •  L  •  1    1.  •!    11       £         1.1.       assigned  to  trust 

actually  paid  in,  m  cash,  assigned  to  or  available  tor  the  business. 
purpose  of  conducting  business  in  any  such  capacity,  or 
trust  business  of  any  character  permitted  by  law^,  and 
which  has  made  with  the  state  treasurer  the  deposit  of 
money  or  securities  of  the  character  and  in  the  amount 
required  by  the  terms  of  section  ninety-six  of  this  act, 
and  which  has  received  from  the  superintendent  of  banks 
the  certificate  of  authority  required  by  the  terms  of  sec- 
tion one  hundred  twenty-seven  of  this  act,  to  transact 
such  business,  may  act,  or  may  be  appointed  by  any 
court  to  act,  in  any  such  capacity  in  like  manner  as  an 
individual  and  when  so  qualified  shall  be  known  as  a 
trust  company.      Any  such  trust  company  may,   as  pro-  Powers  conferred  on 

.  1      I    .         I   .  .  1  •         f  trust  company. 

vided  in  this  act,  accept  or  receive  any  deposit  or  money 
or  personal  property  authorized,  directed  or  permitted  to 
be  made  with  any  such  corporation  by  any  court  or  law 
of  this  state,  and  may  accept  and  execute  any  trust  pro- 
vided for  in  this  act,  or  permitted  by  any  law  of  this 
state,  to  be  taken,  accepted  or  executed  by  an  individual. 
Any  such  trust  company,  if  located  in  a  city  the  popula-  Trust  company  in 

city  of  population 

tion  of  which  does  not  exceed  one  hundred  thousand  per-  not  over  100,000  to 

segregate  and  appor- 

sons  must  segregate  that  portion  of  its  capital  and  surplus  tion  capital  and 

_  ,  surplus  as  security 

assigned  to  or  available  for  its  trust  business  and  must  for  performance  of 

1      1     11  £    private  and  court 

apportion  and  set  aside  at  least  fifty  thousand  dollars  or  trusts,  respectively, 

•  fir^iri£  *^  specified. 

such  paid-up  capital  as  security  for  the  faithful  perform- 
ance and  execution  of  all  private  trusts  accepted  by  it 
and  must  also  apportion  and  set  aside  at  least  fifty 
thousand  dollars  of  such  paid-up  capital  as  security  for 
the  faithful  performance  and  execution  of  all  court  trusts 
accepted  by  it  and  whenever  such  trust  company  shall, 

[115] 


§  84-90  BLYTH,  WITTER  &  CO. 

When  such  trust  yjjjgj.   jj^g   provision    of   scctions   ninety-six   and   ninety- 
company  under  Sees. 

96  and  98  makes  eight  of  this  act,  be  required  to  make  the  first  additional 

first  additional  de-        °  ... 

posit  of  securities  deposit   of  securities  with   the  state   treasurer,   such   trust 

with  State  Treasurer, 

it  must  set  aside  ad-  company  must  also  apportion  and  set  aside  an  additional 

ditional  amounts  of     _., 

paid-up  capital,  as  fifty  thousand   dollars  of  paid-up  capital  as  security  for 

specified,  as  addi-     t  r    .  \   f    \  c  i  •  rii* 

tionai  security  for  the    faithful    performance    and    execution    of    all    private 

performance  of  i     l  •  l  i  •  i 

private  and  court  trusts  accepted    by  it   and   must   also   apportion   and   set 
aside    an    additional    fifty    thousand    dollars    of    paid-up 
capital  as  security  for  the  faithful  performance  and  exe- 
cution of  all  court  trusts  accepted  by  it,   and  any  such 
Any  such  trust  com-  trust  Company,    if   located   in   a   city,    the   population   of 

pany,  if  located  in        ,   .    ,  1  l         i       .1  i 

city  of  population  which    exceeds    one    hundred     thousand    persons,     must 

exceeding  100,000,  .  ,   .  •      i  i  i  •  i 

must  segrregate  that  segregate  that  portion  of  its  capital  and  surplus  assigned 

portion  of  capital  -i    i  i       r  •  i         •  i 

and  surplus  assigned  to  or  available  tor  its  trust  business  and  must  apportion 

to  its  trust  business,  ,  .,  ,  1111  iiii  f 

and  must  apportion  and  Set  aside  at  least  one  hundred   thousand  dollars  or 

at  least  $100,000  ,  .,  .,  ..  ir-iri  r 

thereof  as  security  such  paid-up  Capital  as  secunty  ror  the  raithrul  perrorm- 

for  the  performance  .  .  c  i  .  i      ii    ■     i 

of  its  private  trusts,  ancc  and  cxecution  or  such  private  trusts,  nor  shall  it  be 

prohibited  from  so  doing;  and  provided,  further,  that  the 

Amounts  of  capital  respective  amounts  of  capital  or  capital  and  surplus  so 

or  capital  and  surplus  .  ,  ,  -iiiii  i-ii 

80  apportioned  to  be  apportioned  and  set  aside  shall  be  treated  m  all  respects 

treated  as  separate  .  .       ,  •       i  i  i  f  i 

capital  or  capital  as   the   separate    capital    or   capital   and    surplus    or   each 

and  surplus  of  each  -i-i  i  ri-  i  ii 

respective  class  of  respective  Kind  or  class  or  business,  as  though  the  same 

business,  etc.  ill  1       1-      • 

were  conducted  by  separate  and  distinct  corporations, 
and  each  shall  be  kept,  held,  used  and  disposed  of  wholly 
for  the  exclusive  benefit,  protection  and  security  of  the 
respective  classes  of  trust  business  to  which  the  same 
Where  executor,  ad-  w^erc  respectively  so  apportioned  and  set  aside.      In  all 

ministrator,  etc.,  to  .|.|..  -ii  i-« 

qualify  by  taking  cases  m  which  it  IS  required   that  an   executor,   adminis- 

oath,  etc.,  or  where  ^^  r  •  •  t  • 

affidavit  required,  it  trator,  guardian  of  estates,  assignee,  receiver,   depositary 

shall  be  suflScient  if  1      11  i-r        i  i   •  i  i  -i   • 

same  be  taken  or  or   trustee,    shall    quality    by   taking   and    subscribing   an 

subscribed  by  presi-  ,  .  i«i  rr  \        •      •  •i-iiii 

dent,  etc.;  such  offi-  oath,   or  m  which  an  arhdavit  is  required,   it  shall   be  a 

cer  to  be  liable  for         rr    •  iT-i  i  -ti  ii 

failure  of  trust  com-  suiHcient  qualihcation  by  such  corporation  ir  such  oath  be 

pany  to  perform        ,  i  i  -i        i  i  rr   i        •      i  i       i  i 

duties  required  by  taken  and  subscnbed   or  such  arhdavit  be  made   by  the 

law.  .  ,  .  .  ,  _, 

president,  vice  president,  secretary,  manager,  trust  offi- 
cer, assistant  trust  officer  or  regularly  employed  attorney 
thereof,  and  such  officer  or  employee  shall  be  liable  for 
the  failure  of  such  trust  company  to  perform  any  of  the 

[116] 


TRUST  COMPANIES  §  90 

duties  required  by  law  to  be  performed  by  an  individual 
acting  in  like  capacity  and  subject  to  like  penalties;  pro- 
vided, any  such  appointment  as  guardian  shall  apply 
to  the  estate  only,  and  not  to  the  person. 

Any  trust  company  upon  becoming  a   member  of  a  Trust  company  be- 

fl,  ll-  I'll  1  coming  member  of 

rederal  reserve  bank  is  authorized  and  empowered:  Federal  Reserve 

bank  authorized  to 

Tl       .     .  .  f  .         continue  to  adminis- 

o  continue  to  administer,  execute,  enjoy  and  exercise  ter,  execute  and  en- 
all  court  and  private  trusts  as  defined   in  the  bank  act,  rights,  privileges, 

.    1,  ••!  i.i  r   ^        •  I.-  etc.;  also  to  take, 

powers,   rights,    privileges,   and   other   hduciary  relations,   execute,  etc.,  all 

.     .  .  !!•  -L  1  til.^-  f  new  court  and  private 

appointments  and   business  it  may  have  at  the  time  or  trusts  as  defined  in 

1  •  1.^1  1  iitii  Act,  and  other  pow- 

becoming  such  trust  company  member,  and  also  to  take,  ers,  etc.,  subject  to 

.  ll'-j.  11  J.  1'i.it      requirements  and 

execute  and  administer  all  new^  court  and  private  trusts  limitations  imposed 
as  defined  in  said  bank  act,  including  the  right  to  the  under*Act!°'^^°'^*  "° 
appointment  of  all  fiduciary  capacities  in  which  it  may 
be  named  in  wills  theretofore  and  thereafter  executed 
and  probated,  and  other  appointments,  powers,  priv- 
ileges and  business,  of  every  kind  and  nature,  as  may  be 
then  or  thereafter  permitted  to,  but  subject  to  the  same 
requirements  and  limitations  as  may  be  imposed  upon 
any  corporation  under  all  of  the  provisions  of  the  bank 
act. 

To  hold,  administer,  execute,  and  in  all  respects  gen- 
erally handle,  manage  and  dispose  of,  without  charge, 
restriction,  limitation  or  impairment  of  any  nature,  all  of 
its  investments,  rights,  interests,  titles  to  property,  con- 
tractual, legal  and  other  rights,  obligations  or  liabilities, 
of  every  kind  or  nature,  court  and  private  trusts  as  de- 
fined in  the  bank  act,  and  other  powers  which  it  may  be 
then  permitted  to  exercise  by  law. 

A  foreign  corporation  may  be  authorized  to  act  in  this  Foreign  corporation 

.,  ,  ,  »         .irii         •  authorized  to  deliver 

state  as  trustee  for  the  followmg  purposes :  bonds  and  receive 

payment  or  bonds  in 
/  t  \     T'         1    !•  1  1  I  •  ..1  i-  exchange;  to  regis- 

(  1 )    1  o  deliver  bonds,  and  receive  payment  therefor,  ter,  redeem  and 

cancel  bonds;  to  pay 
.._,-.  ii»  1  i>  interest  on  coupon 

(2)    To    dehver    permanent    bonds    in    exchange    for  bonds  and  cancel 

.  .  -     ,  .  interest  coupons,  and 

temporary  bonds  of  the  same  issue. 

[117] 


§90-91  BLYTH.  WITTER  &  CO. 

under  mor^age^        (^)    '^^  dcHvcr  refunding  bonds  in  exchange  for  those 
deed  of  trust  etc    ^f  ^  orior  issue  or  issues. 

securing  notes  or  *^ 

bonds  issued  by  any 

corpora^ i^on,— as  ^^y  y^  register  bonds,  or  to  exchange  registered 
bonds  for  coupon  bonds,  or  coupon  bonds  for  registered 
bonds. 

(5)  To  pay  interest  on  such  bonds,  and  to  take  up 
and  cancel  coupons  representing  such  interest  pajonents. 

(6)  To  redeem  and  cancel  bonds  when  called  for  re- 
demption, or  to  pay  and  cancel  bonds  when  due. 

(7)  The  certification  of  registered  bonds  for  the  pur- 
pose of  exchanging  registered  bonds  for  coupon  bonds. 

(8)  To  act  as  trustee  under  any  mortgage,  deed  of 
trust,  or  other  instrument  securing  notes  or  bonds  issued 
by  any  corporation. 

[Publishers'  Note,   re  Section  90,   amended  1919: 

This  amendment,  contained  in  the  three  paragraphs  preceding  the  final  para- 
graphs relating  to  foreign  corporations  acting  as  trustees,  seeks  to  preserve  the 
continuity  of  the  trust  relationships  established  by  existing  trust  companies  when 
they  enter  the  Federal  Reserve  system.  The  amendment  is  one  of  precaution,  and 
by  common  consent  is  considered  to  be  necessary.] 

Court  may  authorize       Section    9  1 .       Any    court    having    jurisdiction    of    any 

trustee  or  other  ...  . 

fiduciary  to  deposit  exccutor,  administrator,  guardian,  assignee,  receiver,  de- 
trust  fund  -with  trust 

company,  subject  to  positary   or   trustee,    upon    the   application    of   any   such 

court  order. 

officer  or  trustee,  or  upon  the  application  or  any  person 
having  an  interest  in  the  estate  or  property  administered 
by  such  officer  or  trustee,  after  such  notice  to  the  other 
parties  in  interest  as  the  court  may  direct,  and  after  a 
hearing  upon  such  application,  may  authorize  such  officer 
or  trustee  to  deposit  any  moneys  then  in  his  hands,  or 
which  may  come  into  his  hands  thereafter,  until  the  fur- 
ther order  of  said  court,  with  any  such  trust  company, 
and  upon  deposit  of  such  money,  and  its  receipt  and  ac- 
ceptance by  such  trust  company,  the  said  officer  or  trustee 
shall  be  discharged  from  further  care  or  responsibility 
therefor.  Such  deposit  shall  be  paid  out  only  upon  the 
order  of  said  court. 

11181 


TRUST  COMPANIES  §  92-93 

Section  92.  Any  public  administrator  may  deposit  ^"y"depo"t"estate°' 
any  or  all  moneys  of  any  estate  upon  which  he  is  ad-  fo^^urrent'^expinfes, 
ministering,  not  required  for  the  current  expenses  of  such  with  such  trust 

=>'  ^  '  company. 

administration,  with  any  such  trust  company  having  its 
principal  place  of  business  in  the  county,  or  city  and 
county  in  which  he  is  acting  as  such  administrator.      Any  Court  may  direct 

such  administrator 

court  having  jurisdiction  of  an  estate  being  administered  to  make  deposit 

with  such  trust 

by  a  public  administrator,  may  direct  such  administrator  company. 
to  deposit  all  or  any  part  of  the  moneys  of  said  estate  with 
any  such  trust  company.  Such  deposit  shall  relieve  the 
public  administrator  from  depositing  with  the  county 
treasurer  the  moneys  so  deposited  with  such  trust  com- 
pany. Moneys  so  deposited  by  a  public  administrator 
may  be   draw^n,   upon   the  order   of  such   administrator,  How  such  deposit 

,  .     ,  .  ,  may  be  withdrawn. 

countersigned  by  a  judge  of  the  superior  court,  when  re- 
quired for  the  purposes  of  administration,  or  otherwise. 

Section    93.       Any    court    having    jurisdiction    of    any  Court  may,  under 

specified  conditions, 

estate  in  process  of  administration,  or  any  other  proceed-  order  executor,  ad- 

.         ministrator,  guard- 
ing, may,  on  application  of  any  person  interested  therein,  ian,  trustee,  etc,  to 

deposit  trust  funds, 

or  the  person  who  has  been  selected  by  said  court,   or  a  etc.,  with  any  such 

.     .  ..  trust  company. 

judge  thereof  as  executor,  administrator,  guardian,  as- 
signee, receiver,  depositary  or  trustee,  after  such  notice 
to  the  parties  in  interest  as  the  court  shall  direct,  or  with- 
out notice  if  all  parties  in  interest  consent  thereto,  and  a 
hearing  on  such  application,  order  any  executor,  adminis- 
trator, guardian,  assignee,  receiver,  depositary  or  trustee 
so  selected  or  appointed,  whether  such  person  has  duly 
qualified  or  not  to  deposit  with  any  such  trust  company, 
for  safe-keeping,  such  portion  or  all  of  the  personal  assets 
of  said  estate  as  the  court  shall  deem  proper,  and  upon  Effect  of  such 
such  deposit  being  made,  the  court  shall  by  an  order  of 
record  reduce  the  bond  to  be  given  or  theretofore  given 
by  such  officer  or  trustee,  so  as  to  cover  only  the  estate 
remaining  in  the  hands  of  said  officer  or  trustee;  and  the 
property  so  deposited  shall  thereupon  be  held  by  such 
trust  company,  under  the  order  and  direction  of  said 
court. 

[119] 


§  94-96  BLYTH.  WITTER  &   CO. 


Trust  company  not       Scction   94.     Such  trust  companv  shall  not  be  required 

required  to  give 

bond.  J.Q  give  any  bond  or  security  in  case  of  any  appointment 
or  deposit  of  moneys  or  other  personal  assets  hereinbe- 
fore provided  for,  except  as  provided  in  this  act,  but  shall 
Trust  company  re-  be  responsible  f or  all  investments  which  shall  be  made  by 

sponsible  for  invest-  .,,,,•..  ■,  i  .      r  . 

ments.  it  of  the  tunds  which  may  be  entrusted  to  it  ror  mvest- 
ment  by  such  court,  and  shall  be  liable  to  the  same  ex- 
tent as  an  individual,  and  as  hereinafter  provided. 

Trust  company  to       Section   95.      Such    trust   company   shall    pay   interest 

pay  interest  on  trust  .        ,         .   ,     .  . 

deposits,  upon  all  moneys  so  deposited  w^ith  it  at  such  rate  as  may 
be  agreed  upon  at  the  time  of  its  acceptance  of  any  such 
deposit,  or  as  shall  be  provided  by  the  order  of  court  and 
agreed  to  by  such  trust  company. 

Trust  company,  if       Section    96.      Any  such  trust  company,  if  its  principal 

principal  place  of  r    i  •  •  •  i     •  •  i  i       •  f 

business  in  city  of  place  ot  business  IS  Situated  m  a  city  the  population  or 

population  not  ex-  i  i         i       l  i 

ceeding  100,000,  be-  which  does  not  exceed   one  hundred  thousand  persons, 

fore  accepting  ap-  _  _  i  •  l      ii 

pointment,  etc.,  to  before  accepting  any  such  appointment  or  deposit,  shall 

make  specified  de-     ,  .  .   ,         ,  I  .  •  i      i 

posits  with  State  deposit  With   the  state   treasurer,    as   herein   provided,   at 

Treasurer  to  secure  iiii  •  r  if-iri 

performance  of  its  least   hfty  thousand   dollars  as  security   ror   the   raithrul 

court  trusts  and  i  •  r       ii  i 

private  trusts,  performance  and  execution  or  all  court  trusts  accepted 

by  it,   and  shall  also  deposit  with  the  state  treasurer  at 

least  fifty   thousand   dollars   as   security   for   the   faithful 

performance  and  execution  of  all  private  trusts  accepted 

As  to  making  first  by  it;  and  whenever  any  such  trust  company  shall  under 

'under  Sec?98!  the  provisions  of  section  ninety-eight  of  this  act  be  re- 
quired to  make  the  first  additional  deposit  of  securities 
with  the  state  treasurer  such  trust  company  must  also 
deposit  with  the  state  treasurer  an  additional  fifty  thou- 
sand dollars  as  security  for  the  faithful  performance  and 
execution  of  all  private  trusts  accepted  by  it;  and  any 
Trust  company,  if  trust  Company  if  its  principal  place  of  business  is  situated 

principal  place  of.  .  .  ri-i  i  iii 

business  in  city  of  in  a  City  the  population  ot  which  exceeds  one  hundred 

population  exceeding     .  .       .  ,  .  . 

100,000,  to  make  thousand    persons,    before    accepting   any   such    appoint- 

specified  deposits  ^  .  i      ii      i  •  •   i        i 

■with  State  Treasurer  ment  or  dcposit,  shall  dcposit  With  the  State  treasurer,  as 

to  secure  perform-  ,  .  •  i       i  i  i  i         i       i  i      i     ii 

ance  of  its  court  herein  provided,  at  least  one  hundred  thousand  dollars, 

trusts  and  private  -rir-iri  r  i  •  r 

trusts,  as  security  ror  the  faithful  perrormance  and  execution  or 

1120] 


TRUST  COMPANIES  §  96 

all  court  trusts  accepted  by  it,  and  shall  also  deposit  with 

the  state  treasurer  at  least  one  hundred  thousand  dollars 

as   security   for   the    faithful    performance   and    execution 

of  all  private  trusts  accepted  by  it.      Any  such  deposit  Deposit  to  consist  of 

may  be  made  either  in  lawful  money  of  the  United  States,  !?iassTs"f^s°Jcu7iufs: 

or  in  securities  of  either  or  any  of  the  following  classes: 


(a)  Bonds  issued  by  the  United  States  or  by  this  state  ^a)  Bonds  issued  by 

,       •'  .  -^  .        ,         U.  S.  or  by  State,  or 

or  by  any  county,  city  and  county,  city  or  school  district  specified  subdivisions 

ri-  t  t  e  ...  ?..  I  of  State. 

or  this  state,  or  bonds  of  any  irrigation  district  such  as 
are  legal  for  investment  by  savings  banks; 

(b)  Bonds  for  the  payment  of  which  the  faith  and  (t)  Bonds  for  pay- 

*      "^  ment  of  which  credit 

credit  of  the  United  States  or  of  this  state  are  pledged ;  ?^  ^  p  °/  °^  state 

*^  ^         'is  pledged. 

(c)  Notes  or  bonds  secured  by  mortgage  or  deed  of  ('^^  Notes  or  bonds 

•^  ^    ^  secured  by  mortgage 

trust  constituting  a  first  lien  on  improved  and  productive  «"  improved  cai. 

TGalty,   6XC* 

real  estate  in  the  State  of  California;  such  improved  real 
estate  being  worth  at  least  double  the  amount  of  such 
lien; 

(d)  Notes  or  bonds  secured  by  mortgage  or  deed  of  (d)  Notes  or  bonds 

,  .  .11  1.  f    secured  by  mortgage 

trust,   payment  or  which  is   guaranteed    by  a   pohcy  of  or  deed  of  trust, 

.  ,  .    .  .  .-       payment  of  which 

mortgage  msurance,   and  mortgage   participation   certm-  guaranteed  by 

...  .  ,  ,      mortgage-insurance 

cates,  issued  by  a  mortgage  msurance  company  m  accord-  policy  and  mortgage- 
ance  with  the  provisions  of  Chapter  VIII  of  Title  II  of  ficate  issued  pursuant 
Part  IV  of  division  first  of  the  Civil  Code;  provided, 
that  such  notes  or  bonds  shall  constitute,  and  such  mort- 
gage participation  certificates  shall  evidence  the  owner- 
ship of,  or  participation  in,  notes  or  bonds  which  con- 
stitute, a  first  lien  on  improved  and  productive  real  estate 
in  the  State  of  California,  such  improved  real  estate  being 
worth  at  least  double  the  amount  of  such  lien. 

Such  money  or  securities  shall  be  first  approved  by  the  sec'li'riTy'trbrfirst 
superintendent  of  banks  and,  upon  his  written  order,  de-  ''pp'°^^^  ^^  supt. 
posited  with  the  state  treasurer  for  the  respective  pur- 
poses herein  specified,  and  said  treasurer  shall  give  his 
receipt  therefor,  and  thereafter,  subject  to  the  provisions 

fl211 


§  96-97  BLYTH.  WITTER  &  CO. 


and  disposal  of  pro- 
ceeds, only  on  court 


State  Treasurer  to  ^f  ^{^  gcL  shall  hold  such  deposjts  of  moncy  or  securities 

hold  deposits  sepa-  '  /-/-ii  c    '      ' 

rateiy,  for  benefit  of  separately,  cach  for  the  sole  benefit  or  the  benehciaries 

beneficiaries,  etc.,         r^j  .ri  •! 

and  State  to  be  re-  ©f  the  class  of  trust  busuiess,  for  the  security  and  protec- 

sponsible  for  deposits,  ...i  i  •        i  i«ji 

tion  of  which  the  same  was  deposited,  and  said  treasurer 
shall  give  his  receipt  therefor  and  the  state  shall  be  re- 
sponsible for  the  custody  and  safe  return  of  any  money 
Securities  may,  with  or  securitics  SO  deposited.     Said  securities  or  money  so 
be  wUhdra°wn^or''ex.  deposited  may  wilh  the  approval  of  the  superintendent 
changed.  ^£  j^j^j^j^g^  jjg  withdra'ivn  or  exchanged  from  time  to  time 
for  other  like  securities,  or  lawful  money,  receivable  as 
Trust  company  to  re  aforesaid,  and  so  long  as  the  trust  company  so  deposit- 
divtdrndfon's'ecuH*^  ing  Said  money  or  securities  shall  continue  solvent,  it  shall 
ties  deposited.  ^^^^  ^^  ^j^j^j  ^^^  gj^^U  y^^  permitted  by  the  state  treas- 
urer to  receive  the  interest  and  dividends  on  any  securities 
so  deposited.     Said  securities  and  money  shall  be  subject 
Said  securities  and  to  Sale  and  transfer,  and  to  the  disposal  of  the  proceeds 
sSrandTrSer!  by  Said  state  treasurer,  only  on  the  order  of  a  court  of 
competent  jurisdiction   and   for  the   benefit  respectively 
order,  etc.  ^p  ^^  beneficiaries  of  that  class  of  trust  business  for  the 
security  and  protection  of  which  the  same  were  deposited. 

[Publishers'  Note,  re  Section  96: 

This  section  remains  unchanged.  With  reference  to  the  "Notes  or  bonds 
secured  by  mortgage  or  deed  of  trust  payment  of  which  is  guaranteed  by  a  policy 
of  mortgage  insurance,  and  mortgage  participation  certificates,  issued  by 
a  mortgage  insurance  company"  in  accordance  with  specified  provisions  of  the 
Civil  Code,   see  Appendix  for  provisions  of  the  Civil  Code  referred  to.] 

Trust  company  hav-       Section   97.    Any  such  trust  Company,  having  a  capital 

ing  capital  and  sur-  ,  i        i     ^i  J     J     11 

plus  of  $200,000  or  and   surplus   or   two   hundred   thousand   dollars   or   more 

more  apportioned  as  .  ,  ,  .  ,  •  c  ^L         £    -iL  £    1 

security  for  perform-  apportioned    and    sct   aside   as   security   ror    the    raithrul 

ance  of  court  trusts  .  ,  -fll  ±.    ,.         ,.  tJ 

and  wholly  or  in  part  performance  and  execution  or  all  court  trusts  accepted 

invested  in  its  busi-  ,  .  -il-l-  j.  11_-1.'  Lll 

ness  premises,  may  by  it,  as  provided  m  this  act,  and  which  18  wholly  or  m 
Supt.^t^o'^mort'gage  part  invested  in  the  lot  and  building  in  which  its  business 

same  to  State  Treas-   .  .,  i  -.tiiil  '1.11.1: 

urer,  as  part  of  de-  IS  Carried  on,  may  be  permitted  by  the  superintendent  ot 
^°^'  "  banks  to  mortgage  such  lot  and  building  to  the  state 
treasurer  for  such  sum,  up  to  its  full  market  value,  as  the 
superintendent  of  banks  may  determine,  and  such  mort- 
gage may  be  deposited  with  said  treasurer,  and  when  so 
deposited  it  shall  be  included  in  the  amount  of  securities 
herein   required   to  be   deposited   with   said   treasurer  as 

[122] 


TRUST  COMPANIES  §  98 

security  for   the   faithful   performance  of  all   such   court 
trusts. 

Section   98.     Whenever  any  trust  company,  the  prin-  when  trust  company 

^  .  .  whose  principal 

cipal  place  of  business  of  which  is  located  in  a  city  the  p'^ce  of  business  is 

,  ,  in  city  of  population 

population  of  which  does  not  exceed  one  hundred  thou-  "ot  exceeding  100,000 

receives  from  court 

sand  persons,  receives  from  court  trusts  accepted  by  it,  trusts  trust 

.  e   f  \  funds,  in  amounts 

trust  funds,  as  herein  defined,  to  the  amount  of  five  hun-  as  specified,  respec- 

111  11     II  •iiiri'i  •<••  ••  tively,  such  company 

dred  thousand  dollars,  it  shall  forthwith  notify  in  writing  in  each  case  to 

1  .  ,  i*ii  r  ir  i-i»        notify  Supt.  and 

the   superintendent   of   banks   of   such  fact,   and   withm  thereafter  to  deposit 

,,  ,  ,  1111  "'ii  additional  security 

thirty  days  thereafter  shall  deposit  with  the  state  treasurer  with  state  Treasurer, 

-.,.  ••rii  •  to  be  held  for  the 

additioneJ  money  or  securities  of  the  character  mentioned  sole  benefit  of  the 

.,_,.  .  .  .-,.  ,  beneficiaries,  as 

and  denned  m  section  nmety-six  of  this  act,  approved  as  specified, 
therein  provided,  in  the  amount  of  fifty  thousand  dollars; 
and  whenever  any  trust  company  receives  from  court 
trusts  such  funds  to  the  amount  of  one  million  dollars  it 
shall  further  notify  in  writing  the  superintendent  of  banks 
of  such  fact  and  within  thirty  days  thereafter  shall  de- 
posit with  the  state  treasurer  additional  money  or  securi- 
ties of  the  character  mentioned  and  defined  in  section 
ninety-six  of  this  act,  approved  as  therein  provided,  in 
the  amount  of  fifty  thousand  dollars;  and  for  each  addi- 
tional five  hundred  thousand  dollars  of  such  trust  funds 
thereafter  received  by  any  trust  company  from  court 
trusts  a  similar  notification  in  writing  shall  forthwith  be 
given  to  the  superintendent  of  banks,  and  a  further  de- 
posit in  the  amount  of  twenty-five  thousand  dollars  of 
such  money  or  securities,  or  of  securities  provided  for  in 
section  ninety-seven  of  this  act  likewise  approved,  shall 
be  made,  within  thirty  days  thereafter,  by  such  trust 
company  with  said  state  treasurer,  until  five  hundred 
thousand  dollars  of  such  securities  have  been  so  de- 
posited. The  treasurer  shall  give  his  receipt  for  any 
money  or  securities  so  deposited  and  each  and  all  of  such 
deposits  of  money  or  securities,  shall  be  held  by  said  state 
treasurer  for  the  sole  benefit  of  the  beneficiaries  of  the 
class  of  business  for  the  security  and  protection  of  which 

[123] 


§  98  BLYTH,  WITTER  &  CO. 

state  to  be  respon-  game  wcre  deposited.     The  state  shall  be  responsible  for 

sible  for  such  de-  *^  *^ 

posits,  the  custody  and  safe  return  of  any  money  or  securities  so 
deposited  with  said  state  treasurer.  The  term  "trust 
Trust  funds"  funds"  whcn  used  in  this  section  shall  be  deemed  to  mean 
and  shall  mean  personal  property  and  cash,  whether  re- 
ceived with  the  original  trust  property  or  as  rent,  income 
or  proceeds  thereof,  or  otherwise,  in  connection  with  the 
trust,  and  shall  not  be  deemed  to  include  and  shall  not 

Trust  company  fail-  include  real  property.     Any  trust  company  failing  to  com- 
ing to  comply  with  .,      ,  ..  -    ,  .  .  1     1,  r      r  .  1 
Sec.  to  forfeit  to  ply  with  the  provisions  of  this  section  shall  forfeit  to  the 

state  $100  a  day.  .  . 

State  of  California  one  hundred  dollars  a  day  for  each 
day  during  which  such  failure  or  default  shall  continue. 
Upon  making  a  request  in  writing  to  the  superintendent 
of  banks,  any  such  trust  company  shall  be  entitled  to 
Trust  company  en-  withdraw  from  the  state  treasurer,  from  time  to  time,  a 

titled  to  withdraw  rf     »  c  y  ••  i  ii»i 

from  State  Treasurer  suifacient  amount  of  such  securitics  SO  that  at  all  times  the 

amount  of  securities  .        r  i  •••  i  •.      i      i      ii  e  • 

in  excess  of  require-  amount  of  such  sccurities  SO  deposited  snail  conform  to 
the  requirements  of  this  act,  and  so  that  at  no  time  shedl 
such  trust  company  be  required  to  have  on  deposit  with 
the  state  treasurer  an  amount  of  securities  in  excess  of 
the  requirements  of  this  act.  Upon  receiving  such  re- 
quest in  writing,  and  satisfactory  proof  of  the  facts  war- 
ranting such  withdrawal,  it  shall  be  the  duty  of  the  sup- 
erintendent of  banks  to  forthwith  deliver  to  the  state 
treasurer  a  written  order  directing  the  withdrawzJ  of  said 
securities  so  as  to  conform  with  the  provisions  of  this 
section,  and  it  shall  be  the  duty  of  the  state  treasurer  to 
Validity  of  acts  or  comply  with  such  written  order.     The  validity  or  legality 

proceedings  by  trust       .  t  i  i  i  i 

company  in  adminis-  or  any  act   or  proceeding   done   or   taken    by  any  such 

tration  of  trusts  not  ,       .  .  .  -ill 

affected  or  impaired  trust  Company,  relating  to  or  in  connection  with  the  ad- 

by  neglect  or  failure         .     .  .  ,  .  l      ii  ^  rf  i 

of  trust  company  or  ministration  OF  any  such  trusts,  shall  not  be  artected  or 

any  officer,  etc.,  to.  -ii.,!.  l^  f-1  £  Lii. 

comply  with  Act,  impaired  by  the  neglect  or  railure  or  such  trust  company, 
or  of  any  officer  or  employee  thereof,  to  comply  with 
any  of  the  provisions  of  this  act,  but  all  such  acts  and 
proceedings  done  or  taken  prior  to  the  revocation  of  its 
certificate  of  authority  to  do  such  business  by  the  super- 
intendent of  banks,   under  the  provisions  of  this  act,   or 

[124] 


TRUST  COMPANIES  §  98-101 

the  revocation  by  any  court  or  judge  thereof  of  the  ap- 
pointment, order  or  decree  theretofore  entered  in  such 
trust  matter  shall  be  as  valid  and  effective  for  all  pur- 
poses as  if  any  such  neglect  or  failure  had  not  occurred. 

Section    99.      When  any  part  of  the  securities  so   de-  when  part  of  de- 

•'     *  posit  consists  of 

posited  with  the  state  treasurer  consists  of  notes  or  bonds  notes  bonds  or  par- 

"^  ticipation  certin- 

secured  by  mortgage  or  deed  of  trust,  it  shall  be  accom-  cates  secured  by 

•^  o     o  mortgage,  etc.,  same 

panied  by  a  registrar  of  titles'  certificates  as  to  the  con-  to  be  accompanied 

'^  -^  ^  by  pol:cy  of  mort- 

dition  of  the  title  if  the  notes  or  bonds  are  secured  by  ease  insurance,  or 

abstract  of  title, 

mortgages    covering    property    which    has    been    brought  etc. 
under    the    operation    of    the    land    title    law,    commonly 
called  the  Torrens  title  law,  or  a  policy  of  mortgage  in- 
surance,  or  a  complete  abstract  of  title  or  an  unlimited 
certificate  of  title  or  a  policy  of  title  insurance  prepared 
or  issued  by  a  person,    company  or   corporation   desig- 
nated or  approved  by  the  superintendent  of  banks  and 
authorized   by   law   or   otherwise    found   by   the   superin- 
tendent of  banks  to  be  competent  to  issue  such  evidence  Abstracts  and  poli- 
cies to  be  examined 
of  title,    which   shall   be   examined   and   approved   by   or  and  approved  under 

direction  of  Supt. 

under  the  direction  of  said  superintendent  of  banks.  The 
fees  for  an  examination  of  such  evidence  of  title  by 
council  to  be  paid  by  the  trust  company  making  the  de- 
posit shall  not  exceed  twenty  dollars  for  each  title  ex-  Fees. 
amined,  and  the  fee  for  each  appraiser  not  exceeding 
two,  shall  not  exceed  five  dollars  for  each  mortgage  or 
deed  of  trust. 

(Section  100.     Repealed  1913.) 

Section    101.      For  the  purposes  of  this  act,   all  trusts  ^J^g\\'*''^^'°"  °^ 
permitted  to  be  accepted  or  executed  by  any  such  trust 
company,  under  any  provision  of  this  act  are  hereby  clas- 
sified and  defined  as  either: 

(a)  Court  trusts;  or 

(b)  Private  trusts. 

A  court  trust  is  one  in  which  any  such  trust  company 
acts  under   appointment,    order  or   decree   of  any  court, 

[125] 


"Court  trust" 
defined. 


§  101 BLYTH.  WITTER  &  CO. 

as  executor,  administrator,  guardian,  assignee,  receiver, 
depositary  or  trustee,  or  in  which  it  receives  on  deposit 
from  a  pubHc  administrator,  under  any  provision  of  this 
act,  or  from  any  executor,  administrator,  guardian,  as- 
signee, receiver,  depositary  or  trustee,  under  any  order 
or  decree  of  any  court,  money  or  property. 

"Privat^trusr-       Any  Other  trust  is  a  private  trust;  provided,  that  the 

creator  of  any  private  trust  of  which   a   trust  company 

Private  trust  may  be  shall  be  made,   or  at  any  time  come  to  be,   the  trustee, 

subjected  to  pro-  l  •  r       i  •  r  i 

visions  of  Bank  Act  may,    at  the   time   or   the  creation   or   such   trust   or   the 

relating  to  court  .  ,  .  ,   .  .       , 

trusts— by  the  per-  Creator  ot  any  such  private  trust,  or  his  successors  m  in- 

sons,  and  under  the  i      l        i  r     •       •  i  r  •  i 

conditions,  specified  terest,  and  the  benehciaries  thereof  may,  at  any  time,  by 
their  joint  consent,  direct  that  such  trust  shall  be  subject 
to  and  entitled  to  the  benefit  of  all  of  the  provisions  of 
this  act  relating  to  court  trusts  and  thereafter  such  trust 
shall  for  all  the  purposes  of  this  act  be  deemed  to  be  a 
court  trust  and  wherever  in  this  act  the  words  "court 
trust"  are  used  they  shall  be  deemed  to  include  private 
trusts  which  are  subject  to  supervision  except  in  so  far  as 
any  of  the  provisions  of  this  act  relating  to  court  trusts 
may,  by  their  nature,  be  inapplicable  to  such  private 
trust.  Such  direction  shall  be  in  writing  addressed  to  the 
trustee  and  a  copy  thereof,  certified  by  the  trustee,  de- 
livered to  the  superintendent  of  banks. 

In  case  such  direction  shall  be  made  after  the  accept- 
ance of  the  trust,  the  trustee  shall  have  the  right  to  resign 
as  such  and  a  new  trustee  shall  be  appointed  as  provided 
Inspection  and  super-  jn  the  trust  instrument  or  by  law.      The  inspection  and 

vision  by  Supt.  _  _ 

covers  court  trusts,  supervision  of  the  superintendent  of  banks  shall  extend 

also  private  trusts 

when  subjected  to  only  to  court  trusts  as  herein  defined  and  to  private  trusts 

Act. 

subjected  to  the  provisions  of  this  act  relating  to  court 
trusts  as  above  provided. 

Private  trusts,  ex-       Private  trusts,  except  as  in  this  section  provided,  shall 

cept  as  in  Sec.  pro-  »  x-  f  » 

vided,  not  subject  to  not  be   subject   to    the   inspection   or   supervision    of   the 

supervision  of  Supt.  r-  r- 

superintendent  of  banks,  his  attorneys,  examiners  or  other 
assistants. 

[126] 


TRUST  COMPANIES  §  101-103 

In  making  the  reports  to  the  superintendent  of  banks  Trust  company,  in 

°  ^  *^  making  reports  to 

required  by  this  act,  every  trust  company  shall,  in  addi-  Supt.,  to  furnish 

^  -^  •'  »         -  specified  informa- 

tion to  the  other  facts  to  be  reported  by  it,   furnish  only  tion  as  to  its  court 

trusts  and  private 

a  list  and  brief  description  of  the  court  trusts  and  private  trusts  subject  to 

supervision. 

trusts,  which  are  subject  to  supervision,  held  by  it,  the 
source  of  appointment  thereto,  the  authority  by  which 
the  appointment  or  deposit  was  made,  and  the  amount 
of  real  or  personal  property  held  by  such  trust  company 
by  virtue  thereof. 

Nothing  in  this  act  contained  shall  make  it  unlawful  for  when  person  or  cor- 

_  _    ,  poration,  not  a  trust 

any  person  or  corporation  not  subject  to  the  supervision  company,  may  hold 

_  .11.  money  in  escrow  or 

of  the  superintendent  of  banks  to  engage  in  the  business  act  as  trustee. 
of  receiving  and  holding  in  escrow  money  or  its  equiva- 
lent pending  investment  in  real  estate  or  securities  for  or 
on  account  of  his  or  its  principal,  or  of  acting  as  trustee 
under  deeds  of  trust  given  solely  for  the  purpose  of 
securing  obligations  for  the  repayment  of  money,  other 
than  corporation  bonds. 

Section    1  02.     Any  corporation  which  desires  to  with-  ^^".YdSlr 
draw  from  and  discontinue  doing  a  trust  business  shall  buTine*si""furnrs^hing 
furnish  to  the  superintendent  of  banks  satisfactory  evi-  ^nd  dUcVarge'fr^om 
dence  of  its  release  and  discharge  from  all  the  obligations  trus°t^s'supt"sha"ii 
and  trusts  hereinbefore  provided  for,  and  thereupon  the  of7u4ority^^o^d°o 
superintendent    of   banks   shall    revoke   his   certificate   of  gutl  TTeas^ure^^ 
authority  to  do  a  trust  business  theretofore  issued  to  such  ^haii  return  deposits, 
corporation,   and  the  state  treasurer  shall  return  to  said 
corporation  all  the  securities  deposited  by  such  corpora- 
tion and  shall  cancel  any  mortgage  made  by  such  cor- 
poration to  said  state  treasurer  as  a  part  of  such  securities, 
and   thereafter  such   corporation   shall   not  be   permitted 
to  use  and  shall  not  use  the  word  "trust"  in  its  corporate 
name  or  in  connection  with  its  business. 

Section    103.     Any  trust  company  exercising  the  pow-  fJi^dentL"!*' """ 
ers  and  performing  the  duties  provided   for  in   this  act, 
shall,  except  as  herein  otherwise  provided,  keep  inviolate 
all    communications   and    writings   made    to    or   by   said 

[127] 


§  103-106 BLYTH.  WITTER  &  CO. 

trustee  touching  the  existence,  condition,  management 
and  administration  of  any  private  trust  confided  to  it; 
and  no  creditor  or  stockholder  of  any  such  trust  company 
shall  be  entitled  to  disclosure  or  knowledge  of  any  such 
Who  entitled  to  communication   or  writing;   provided,   however,   that  the 

knowledge  of  writ-  •  i        .         •  •  i        .  ,  ,       rr 

ings,  etc,  president,  vice-president,  manager,  trust  orhcer,  secretary 
or  regularly  employed  attorney  of  any  such  trust  com- 
pany shall  be  entitled  to  knowledge  of  any  such  com- 
munication or  writing;  and  provided  further,  that  in  any 
suit  or  proceeding  touching  the  existence,  condition,  man- 
agement or  administration  of  any  such  trust,  the  court 
wherein  the  same  is  pending  may  require  disclosure  of 
any  such  communication  or  writing. 

(Section    104.      Repealed    1913.) 

Investment  of  capi-       Scctioii   105.      Evcry  trusl  coiTipany  shall,  except  as 

tal,  surplus  and  ,  ,  -^  ,  .  . 

trust  funds  by  trust  otherwise  providcd  by  law,  invest  its  capital  and  surplus 

company,  ^  ,^  ,.,. 

and  any  trust  funds  received  by  it  in  connection  with  its 
trust  business,  in  accordance  with  the  laws  relative  to  the 
investment  or  loan  of  funds  deposited  with  savings  banks, 
unless  a  specific  agreement  to  the  contrary  is  made  be- 
tween the  trust  company  and  the  party  creating  the  trust, 
or  unless  it  is  otherwise  ordered  by  the  court,  in  connec- 
tion with  any  court  trust. 

Trust  company,  to       Section    1  06.     Any  such  trust  company  desiring  to  do, 

do  departmental  •'  r        j  o  ' 

business,  also  must  or   doing,    a   commercial   banking  business    or   a    savings 

have  capital  specified  ^  ^  _  _ 

by  Sec,  23.  bank  business,  or  both,  in  addition  to  its  trust  business 
shall  have  actually  paid  up,  in  cash,  the  amount  of  capital 
provided  in  section  twenty-three  of  this  act. 

Title  insurance  com-        Any  title  insurance  company  authorized  by  its  articles 

pany  authorized  to_ 

do,  or  doing,  trust  of  incorporation  to  do,  or  doing  a  trust  business,  in  addi- 

business,  shall  com-     _  .  .   .        .  ,  .  in  i  •   i  ii 

ply  with  specified  tion  to  its  title  insurance  business,  shall  comply  w^ith  all 
the  requirements  of  any  law  governing  trust  companies, 
and  shall  have  a  capital  stock  actually  paid  in,  in  cash,  of 
not  less  than  two  hundred  thousand  dollars,  and  in  ad- 
dition thereto,  the  capital  stock  required  by  law  for  doing 

[1281 


requirements. 


TRUST  COMPANIES  §  106-107 

a  title  insurance  business.  Such  capital  for  each  such  de- 
partment or  class  of  business  shall  be  increased  from 
time  to  time  in  the  same  manner  and  to  the  same  extent 
as  though  each  such  department  or  class  of  business  was 
conducted  by  a  separate  bank,  trust  company  or  title 
insurance  company,  instead  of  as  separate  departments 
or  classes  of  business.     Any  trust  company  and  any  title  Trust  company  and 

,     ,  ,  II-  title  insurance  com- 

msurance    company    domg    a    departmental    busmess    as  pany  doing  depart- 

-ll  ••  r      1   •      "^sntal  business  to 

above  provided  shall  comply  with  the  provisions  of  this  comply  with  depart- 

mental  provisions 

act  governing  each   of  such   departments   and   w^ith   the  of  Act,  etc. 
provisions  of  any  law^  governing  each  such  class  of  busi- 
ness as  to  its  deposits,  reserve,  surplus,  investments  and 
loans. 

Section    107.      Any  corporation  doing  a  departmental  further  provisions 

aifectmg  last-men- 

business  as  a  title  insurance  company  and  as  a  trust  com-  tioned  company. 
pany,  shall,  as  to  its  trust  department,  be  subject  to  the 
supervision  and  inspection  of  the  superintendent  of 
banks,  and  as  to  its  trust  department  must  make  all  re- 
ports to  the  superintendent  of  banks  required  to  be  made 
by  trust  companies  by  the  provisions  of  this  act,  and  as 
to  its  trust  department  such  corporation  shall  also  be 
subject  to,  and  shall  have  the  benefit  of  all  other  pro- 
visions and  requirements  of  this  act  applicable  to  trust 
companies,  and  shall  also  be  subject  to  and  shall  have 
the  benefit  of  all  of  the  banking  laws  and  rules  and  regu- 
lations of  the  banking  department  of  this  state  applicable  Proportionate  part 

.  ■     ,  of  State  banking 

to  trust  companies.     The  proportionate  part  of  the  state  fund  payable  by 

,,.«,  -iiri  •  111  1    ^"'^^  corporation, 

banking  fund  provided  for  by  section  one  hundred  and  etc 
twenty-three   of  this  act,    that  shall   be  payable  by  such 
corporation,  shall  be  based  on  the  amount  of  capital  and 
surplus  of  such  corporation  apportioned  to  its  trust  de- 
partment. 


1129] 


§  120-121  BLYTH,  WITTER  &  CO. 


ARTICLE  V. 
STATE  BANKING  DEPARTMENT. 

state  Banking  De-        Section    120.     There  is  hereby  created  a  state  banking 

partment  created. 

Superintendents  department.     The  chief  officer  of  such  department  shall 

appointment,  tenure,   , 

salary,  oath  and  be  the  Superintendent  thereof,  and  be  known  as  the  sup- 
bond. 

erintendent   of   banks.       He    shall    be    appointed    by   the 

governor,  and  shall  hold  office  at  the  pleasure  of  the 
governor.  He  shall  not,  either  directly  or  indirectly,  be 
interested  in  any  commercial  bank,  savings  bank  or  trust 
company,  or  as  an  individual  banker.  He  shall  receive 
an  annual  salary  of  ten  thousand  dollars,  to  be  paid 
monthly  out  of  the  state  treasury  on  a  warrant  of  the 
controller.  He  shall,  within  fifteen  days  from  the  time 
of  notice  of  his  appointment,  take  and  subscribe  to  the 
constitutional  oath  of  office,  and  file  the  same  in  the  office 
of  the  secretary  of  state,  and  execute  to  the  people  of  the 
state  a  bond  in  the  penal  sum  of  fifty  thousand  dollars, 
with  corporate  surety  or  two  or  more  sureties  to  be  ap- 
proved by  the  governor  of  the  state,  conditioned  for  the 
faithful  discharge  of  the  duties  of  his  office. 

Superintendent  to       Section    121.     The  Superintendent  of  banks  shall  em- 

employ  assistants:       -i  l_-£iti  ii  •  i 

Their  qualification,  ploy  a  chiet  deputy,   attorney  and  such   exammers  and 

duties  and  compensa-       .  i  ...  i  i    .         i  •      i 

tion.  other  assistants  as  he  may  need  to  discharge  in  a  proper 
manner  the  duties  imposed  upon  him  by  law,  none  of 
which  examiners  or  assistants  or  attorney  shall  be  in- 
terested in  any  bank  in  this  state  as  director,  stockholder, 
officer  or  employee,  and  they  shall  perform  such  duties 
as  he  shall  assign  to  them.  He  shall  fix  the  compensa- 
tion of  the  chief  deputy,  attorney,  examiners  and  other 
assistants,  which  compensation  shall  be  paid  monthly  on 
his  certificate  and  on  the  warrant  of  the  controller  out  of 
tion^of  chief  deputy.  ^^^  State  treasury.  The  chief  deputy  shall  within  fifteen 
days  from  the  time  of  his  appointment  take  and  subscribe 
to  the  constitutional   oath  of  office  and   file  the  same  in 

[130] 


STATE  B ANK ING  DEPARTMENT  §  121-123 

the  office  of  the  secretary  of  state.  No  person  shall  be 
appointed  a  chief  deputy  who  has  not  had  at  least  three 
years'  active  banking  experience,  either  as  an  executive 
officer  or  employee  of  some  bank  in  this  state.      In  case  During  absence  or 

.     ,  ,  .       ,   .,.  •         \  en  inability  of  Super- 

or  the  absence  or  mability  to  act,  or  vacancy  m  the  ornce  intendent,  chief 

-,  .,  riiri-  •  deputy  to  act,  upon 

or  the  supermtendent  of  banks  tor  thirty  consecutive  giving  bond. 
days,  the  chief  deputy  shall  execute  to  the  people  of  the 
state  a  bond  in  the  penal  sum  of  fifty  thousand  dollars, 
with  corporate  surety  or  two  sureties  to  be  approved  by 
the  controller  and  treasurer  of  the  state,  conditioned  for 
the  faithful  discharge  of  the  duties  of  the  superintendent 
while  such  deputy  acts  as  superintendent,  and  upon  filing 
such  bond  such  deputy  shall  have  all  the  power  and 
duties  of  superintendent  of  banks,  until  the  inability  of 
the  superintendent  shall  be  removed,  or  until  a  new  sup- 
erintendent of  banks  shall  have  been  appointed  by  the 
governor.      No   superintendent   of   banks,    chief   deputy.  Superintendent, 

•  1111  1111  'Jl-J      '^^^^^  deputy  or 

or  bank   examiner,    shall   be    or   shall    become   indebted,  examiner  not  to  be 

.,.,.,  1  1  obligated  to  any 

directly    or    indirectly,     either    as     borrower,     endorser,  bank. 
surety,  or  guarantor,  to  any  bank  under  his  supervision  or 
subject  to  his  examination. 


nn- 
Fran- 


Section  122.  The  superintendent  of  banks  shall  have  °^^^^t1n^^P^ 
his  principal  office  in  the  city  of  San  Francisco,  and  may  "^^^  «"«i  ^°^  Angeles. 
also  have  suitable  rooms  in  the  city  of  Los  Angeles, 
wherein  to  conduct  the  business  of  the  state  banking 
department.  The  superintendent  shall,  from  time  to 
time,  obtain  the  necessary  furniture,  stationery,  fuel, 
lights,  and  other  proper  conveniences  for  the  transaction 
of  such  business;  the  expense  of  which  shall  be  paid  out 
of  the  state  treasury  on  the  certificate  of  the  superin- 
tendent and  the  warrant  of  the  controller. 

Section    123.     A  fund  is  hereby  created  to  be  known  state  banking  fund 

created,  out  of  wnicn. 

as  the  state  banking  fund,  and  out  of  said  fund  shall  be  expenses  of  banking 

.111  department  to  be 

paid  all  the  expenses  incurred  in  and  about  the  conduct  paid. 
of  the  business  of  the  banking  department,  including  the 
salary  of  the  superintendent,   chief  deputy,  attorney,   ex- 

11311 


§123  BLYTH,  WITTER  &  CO. 

annuany^^°sha°re  of  ^''"i^^i's  and  Other  assistants,  traveling  expenses,  furnish- 
accordin- u.Ta "^u"!  "^^  °^  tooms  and  rent.     Each  bank  shall  pay  annually  its 
and  surplus,  share  of  One  hundred  and  ten  thousand  dollars,  to  be  de- 
termined by  the  proportion  which  the  capital  and  surplus 
which  shall  include  all  reserve  and  contingent  funds,  of 
any  incorporated  bank  or  the  surplus,  reserve  and  con- 
tingent funds  of  any  bank  organized   without  a  capital 
stock  bear  to  the  capital,  surplus,  reserve  and  contingent 
funds  in  the  aggregate  of  all  such  banks  receiving  cer- 
tificates   of    authorization    from    the    superintendent    of 
banks,  as  shown  by  the  last  report  of  such  bank  to  the 
Supt.  may,  at  dis-  superintendent  of  banks;  provided,  that  the  superintend- 

cretion,  collect  less 

sum,  if  same  suffi-  ent  of  banks  may,  in  any  fiscal  year  and  in  the  exercise 

cient  to  pay  ex- 
penses, of  his  discretion,  collect  from  each  bank  a  less  sum  to  be 

determined  by  the  proportion  established  in  this  section, 
if  such  less  sum  be  sufficient  to  pay  all  the  expenses  in- 
curred in  and  about  the  conduct  of  the  business  of  the 
banking  department,  including  the  salary  of  the  super- 
intendent, chief  deputy,  attorney,  examiners  and  other 
assistants,  traveling  expenses,  furnishing  of  rooms  and 
Control  and  disposi-  rent.      All  moneys  collected  or  received  by  the  superin- 

tion  of  State  bank-  cii  i  ii-  ri  •• 

ingfund.  tcndcnt  of  banks,  under  and  by  virtue  or  the  provisions 
of  this  act,  shall  be  by  him  delivered  to  the  treasurer  of 
the  state,  who  shall  deposit  the  same  to  the  credit  of  said 
banking  fund,  and  the  unexpended  balance  of  all  moneys 
heretofore  paid  into  the  state  treasury  by  any  of  the  bank 
commissioners  or  the  superintendent  of  banks,  shall  be 
Supt.  may  retain  retained  and  become  a  part  of  said  fund;  provided,  how- 

control  of  $2,000,  to  ,  ,  .  ,  1111  1         • 

be  used  as  revolving  ever,   that  the  Superintendent  shall  have  authority  to  re- 
fund for  benefit  of  ,.  .  iii-  11  r 

Dept.,  etc.  tain  in  his  possession  and  under  his  control  the  sum  of 

two  thousand  dollars  to  be  used  by  him  as  a  revolving 

fund  for  the  benefit  of  the  state  banking  department  until 

the  end  of  the  fiscal  year,  at  which  time  he  shall  make 

Penalty  for  non-pay-  full  Settlement  with   the   treasurer  of   the   state.      If  any 

ment  by  bank  of  pro-  1      1  1        1      11     r    -i  11  L  • 

rata  of  expense,  such   bank  shall   rail   to   pay  such  charges  as  are  herein 

[132] 


STATE  BANKING  DEPARTMENT  §  123-124 


required,  the  superintendent  shall  forthwith  cancel  the 
certificate  of  said  bank. 

[Publishers'  Note,  re  Section  123,   amended  1919: 

This  amendment  increases  the  appropriation  required  for  the  conduct  of  the 
State  Banking  Department  to  $110,000  a  year,  or  as  much  less  as  may  be  neces- 
sary properly  to  administer  the  banks  through  the  agencies  of  supervision  and 
visitation,  and  also  permits  an  increase  in  the  revolving  fund  which  is  directly 
under  authority  of  the  Superintendent  of  Banks  from  $500  to  $2000.  The  con- 
sensus of  opinion  of  both  the  bankers  and  the  State  Banking  Department  is  that 
the  amendments  are  necessary  for  a  proper  government  of  the  banks.  The  banks 
of  this  state  have  expanded  enormously  within  the  last  few  years  in  assets  and 
liabilities,  and  the  duties  involved  in  their  supervision  have  become  very  much 
greater  than  they  were  when   the  original  fund  was  established.] 

Section    124.      Every  bank  and   the  trust  department  Every  bank,  and 

-  .  ,       .  ,     .  ,         .  trust  dept.  of  title 

or  every  title  insurance  company  doing  a  trust  business,  insurance  company 

,,,1  ,.  ,.  .  -,  .  ,  -    doing  trust  business, 

shall  be  subject  to  the  inspection  or  the  superintendent  or  to  be  subject  to  in- 

bi  r-ri  .  1  r    1  1  1  1   •     r     1  spection  of  Supt. 

anks.       1  he  superintendent  or  banks,   the  chier  deputy, 

or  some  competent  person  or  persons  to  be  appointed  by  Supt.  or  other  ex- 

,  •  1  f   1  1  11  •  aminers  as  specified, 

the  superintendent  or  banks,   to  be  known  as  examiners,  to  examine  every  bank 

II,..,  .  Ill  ,      at  least  once  a  year. 

shall   visit  and   examine   every   bank  at   least   once   each 

fiscal   year.      On   every  such   examination   inquiries   shall  what  such  examina- 

,  111-  1  !••  1  r    ^^""^  shall  cover. 

be  made  by  him  as  to  the  condition  and  resources  of 
the  bank,  the  mode  of  conducting  and  managing  its 
affairs,  the  action  of  its  directors,  the  investment  and  dis- 
position of  its  funds,  the  safety  and  prudence  of  its  man- 
agement, the  security  afforded  to  those  by  whom  its  en- 
gagements are  held  and  whether  the  requirements  of  its 
articles  of  incorporation  and  the  law  have  been  complied 
with  in  the  administration  of  its  affairs,  and  as  to  such 
other  matters  as  the  superintendent  may  prescribe. 
Whenever,    in    the    judgment    of    the    superintendent    of  Supt.  may  make 

extra  examinations 

banks,  the  condition  of  any  bank  renders  it  necessary  or  for  which  bank  shall 

.  .  ,  pay  $20  per  day  for 

expedient  to  make  an  extra  examination  or  to  devote  any  each  bank  and  each 
extraordinary  attention  to  its  affairs  the  superintendent 
of  banks  shall  have  authority  to  make  any  and  all  neces- 
sary extra  examinations  and  to  devote  any  necessary 
extra  attention  to  the  conduct  of  its  affairs;  and  such 
bank  shall  pay  for  all  such  extra  services  rendered  by 
the  superintendent  of  banks  at  a  price  to  be  fixed  by  the 
superintendent  of  banks  but  not  to  exceed  twenty  dollars 
per  day  for  the  examination  of  the  principal  office  of  such 
bank  and   twenty  dollars  a  day   for   the  examination   of 

[1331 


branch. 


Supt.  may  administer 
oath  and  compel  at- 
tendance of  wit- 
nesses. 


§  124-125  BLYTH,  WITTER  &  CO. 

Supt.  may  examine  gach  branch  office  of  each  bank.     The  superintendent  of 

California  agency  of 

foreign  bank,  banks  shall  also  have  power  to  examine,  or  cause  to  be 
examined,  every  agency  located  in  this  state  of  any  for- 
eign bank  or  banking  corporation,  for  the  purpose  of 
ascertaining  whether  it  has  complied  with  the  laws  of 
this  state,  and  for  such  other  purposes  and  as  to  such 
other  matters  as  the  superintendent  may  prescribe.  The 
On  examination  Superintendent,  chief  deputy,  and  every  such  examiner 
shall  have  the  power  to  administer  an  oath  to  any  person 
whose  testimony  he  may  require  on  the  examination  of 
any  bank,  or  on  the  examination  of  any  agency  of  any 
foreign  bank  or  banking  corporation,  and  to  compel  ap- 
pearance and  attendance  of  any  such  person  for  the  pur- 
Examiner  to  report  pose  of  any  such  examination.     When  a  bank  shall  have 

doubtful  securities   ,  •  i    i  •  i    i         c       1 

to  Supt.  been  exammed  by  any  exammer,  and  he  rinds  securities 
therein  which  are,  in  his  judgment,  of  doubtful  value, 
he  shall  report  the  same  to  the  superintendent  of  banks, 
who  thereupon  shall  be  authorized  to  employ  appraisers 
at  the  expense  of  such  bank  to  appraise  said  securities,  at 
a  compensation  to  be  fixed  by  the  superintendent  of 
Supt.  shall  provide  banks.      The    superintendent    of   banks    shall,    whenever 

auditor,  at  hank's 

expense,  when  bank  required   to   do   SO  by  any  bank,    provide  an  auditor   to 

requests. 

make  an  audit  of  the  affairs  of  such  bank.      The  com- 
pensation  for   making   such   audit   shall   be   paid   by   the 
Supt.  not  to  examine  bank  direct  to  the     person  making  the  audit.      Nothing 

private  trust  or  title 

insurance  business,  herein  shall  be  deemed  to  authorize  or  require  the  sup- 

of  corporation  doing 

trust  business,  erintendent  of  banks  to  inspect  or  supervise  the  private 
trust  business  or  title  insurance  business  of  any  corpora- 
tion doing  a  trust  business. 

[Publishers'   Note,   re   Section  124,   amended  1919: 

This  amendment  provides,  in  substance,  that  whenever  the  Superintendent  of 
Banks  may  deem  that  a  bank  requires  extraordinary  or  extra  attention  and  ex- 
amination, he  may  have  authority  to  charge  at  the  rate  of  $20  per  day  for  such 
examination  for  the  main  office  and  each  branch  of  the  institution.  He  was  pre- 
viously restricted  to  a  charge  of  $20  a  day  in  an  extraordinary  examination  of  a 
bank,  irrespective  of  the  number  of  its  branch  offices.  The  extension  of  branch 
offices  has  made  the  amendment  necessary.] 

Oath  of  examiners.  Section  125.  Every  examiner  appointed  by  the  sup- 
erintendent of  banks  shall,  before  entering  upon  the  dis- 
charge of  his  duties,  take  the  constitutional  oath  of  office 

[1341 


STATE  BANKING  DEPARTMENT  §  125-127 

and  cause  the  same  to  be  filed  in  the  office  of  the  secre- 
tary   of    state.       No    such    examiner    shall    be    appointed  No  examiner  to  be 

.  ...  .  1        /r    •        I         appointed  receiver 

receiver  or  any  bank  whose  books,  papers  and  affairs  he  of  bank  examined 
shall  have  examined  pursuant  to  his  appointment. 

Section    126.       If   the   chief    deputy   or   any    examiner  Neglect  of  chief 
shall  have  knowledge  of  the  insolvency  or  unsafe  condi-  to^epor7knT^"un- 
tion   of  any  bank   mentioned   in   this  act,    and   that  it  is  made  feio'ny°"^ 
unsafe   or  inexpedient   to   permit  said   bank   to   continue 
business,  and  shall  neglect  to  forthwith  report  such  fact 
in    writing    over    his   signature    to    the    superintendent    of 
banks,  he  shall  be  guilty  of  a  felony. 

Section    1  2  7.     When  any  number  of  persons  desire  to  Written  consent  of 

Sunt,  prerequisite 

organize  a  corporation  to  conduct  any  one  or  more  or  all  to  organizing  a 
of  the  businesses  mentioned  in  divisions  (a),  (b),  and 
(c)  of  section  two  of  this  act  or  to  circulate  stock  sub- 
scription lists  for  any  such  proposed  corporation  the 
previous  written  consent  of  the  superintendent  of  banks 
to   such   proposed    organization   must  be    obtained.       No  Bank  must  have  a 

III      II  1.  .|.  .i  I         certificate  from  Supt. 

bank  shall  transact  any  business  in  this  state  without  the  before  transacting 

l)usin6SSi 

written  approval  of  the  superintendent  of  banks,  and 
w^ithout  his  written  certificate  stating  that  it  has  complied 
with  the  provisions  of  this  act,  and  all  the  requirements 
of  law,  and  that  it  is  authorized  to  transact,  within  this 
state,  the  business  specified  therein;  which  certificate  may  certificate  may  be 

b  .111111  .  I  rii  1  I         withheld  by  Supt. 

e  withheld  by  the  superintendent  or  banks  whenever  he  under  certain  condi- 

has  reason  to  believe  that  the  bank  is  being  formed  for 

any  other  than  the  legitimate  objects   contemplated  by 

this  act,   or  whenever  he  has  reason  to  believe  that  the 

public  convenience  and  advantage  will  not  be  promoted 

by  the  opening  of  such  bank,  or  whenever  he  has  reason 

to  believe  that  the  corporate  name  assumed  by  such  bank 

resembles,  so  closely  as  to  be  likely  to  cause  confusion, 

the  name  of  any  other  bank  previously  formed  under  the  ^   ^..    ,      ,  .   . 

-'  '  Certificate  not  to  be 

lav/s    of   this   state.       Before    issuing   such    certificate    the  issued  before  ex- 

amination  and  com- 

superintendent  of  banks  shall   examine,   or  cause  an  ex-  piiance  with  require- 

^  mcnts  as  to  capital 

amination  to  be  made,  in  order  to  ascertain  whether  the  and  surplus. 

1135] 


§  127-129 BLYTH.  WITTER  &  CO. 

requisite  capital  of  such  bank  has  been  paid  up  in  cash 
or  the  requisite  reserve  or  surplus  fund  has  been  accumu- 
lated. The  superintendent  of  banks  shall  not  authorize 
such  bank  to  commence  business  until  it  appears  from  such 
examination,  or  other  evidence  satisfactory  to  him,  that 
the  requisite  capital  has  been,  in  good  faith,  subscribed 
and  paid  in,  in  cash,  or  that  the  requisite  surplus  or  re- 
serve fund  has  been  accumulated  or  paid  in,  in  cash,  and 
Fees  payable,  until  Said  bank  shall  have  paid  a  fee  of  fifty  dollars  for 
each  department  to  be  operated  by  said  bank. 

[Publishers'   Note,   re   Section   127: 

This  section  remains  unchanged.  See  Appendix,  for  copy  of  Section  1278, 
Code  of  Civil  Procedure,  providing,  in  effect,  that  a  banking  corporation  desiring 
to  change  its  corporate  name  shall  file  in  court  a  certificate  of  the  Superintendent 
of  Banks  that  the  name  desired  does  not  too  closely  resemble  that  of  any  other 
bank.] 

When  articles  filed       Section    128.      When  the  certified  copy  of  articles  of 

■with  Secy,  of  State  ^•' 

and  application  made  incorporation  of  any  bank  shall  have  been  filed  with  the 

for  certificate,  Supt. 

to  ascertain  fitness  secretary  of  State,  and  application  made  for  the  issuance 

of  persons  named  as 

stockholders,  etc.  of  a  Certificate  to  do  business  as  a  bank,  the  superintend- 
ent of  banks,  provided  he  has  not  withheld  granting  his 
certificate  for  any  of  the  reasons  set  forth  in  section  one 
hundred  twenty-seven  hereof,  shall  ascertain,  from  the 
best  sources  of  information  at  his  command,  whether 
the  character  and  general  fitness  of  the  persons  named  as 
stockholders  are  such  as  to  command  the  confidence  of 
the  community  in  which  such  bank  is  proposed  to  be 
located,  and,  if  so  satisfied,  he  shall  w^ithin  sixty  days 
after  such  application  has  been  made  to  him,  issue,  under 
his  hand  and  official  seal,  the  certificate  of  authoriza- 
tion required  by  this  act.  The  superintendent  of  banks 
shall  file  a  duplicate  of  such  certificate  in  his  own  oflnce. 

Departmental  bank       Section    129.      Every  bank  doing  a  departmental  busi- 

must  make  and  pub- 
lish separate  finan-  j^ggg  shall  render  to  the  superintendent  of  banks  for  each 

cial  reports  of  each 

department,  department  conducted  by  it,  a  separate  report  showing 
in  detail  as  required  by  section  one  hundred  thirty  of  this 
act,  the  actual  financial  condition  of  such  department 
and  shall  at  the  time  of  furnishing  said  report  separately 

[136] 


STATE  BANKING  DEPARTMENT  §  130 

publish  the  statement  for  each  department  as  provided 
in  section  one  hundred  thirty-two  of  this  act. 

Section    130.      Every  bank,   organized  under  the  laws  Verified  reports  to 

£      1_  •  1111  -111  •  1       ^®  ""^^^  ^^  ^^°^ 

or  this  state,  shall,  whenever  required  by  the  superintend-  whenever  required 

.  .   .  ,   .  .  ^      ,    ty  Superintendent. 

ent  or  banks,  make  a  report  in  writing  to  him,  verihed 
by  the  oath  of  its  president  and  its  secretary  or  cashier, 
or   two    principal    officers.      Such    report   shall    show   the  what  such  reports 

,    _  .  .  ,        ,  1   •  1  must  show, 

actual  financial  condition  of  the  bank  making  the  report, 
at  the  close  of  any  past  day  designated  by  the  superin- 
tendent, and  shall  specify  the  following: 

1 .  The  amount  of  its  capital  stock  and  the  number  of 
shares  into  which  it  is  divided. 

2.  The  names  of  the  directors  and  the  number  of 
shares  of  stock  held  by  each. 

3.  The  total  amount  of  capital  actually  paid  in,  in 
cash,  and  the  total  amount  of  surplus,  reserve  and  any 
other  funds. 

4.  The  total  amount  due  the  depositors. 

5.  The  total  amount  and  character  of  any  other  lia- 
bilities it  may  have. 

6.  The  amount  at  which  the  lot  and  building  occupied 
by  the  bank  for  the  transaction  of  its  regular  business 
stands  debited  on  its  books;  also  the  market  value  of 
all  other  real  estate  held,  whether  acquired  in  settlement 
of  loans  or  otherwise,  the  original  cost  to  the  bank,  the 
date  when  acquired,  the  amount  at  which  it  stands 
debited  on  the  bank  books,  in  what  counties  situated, 
and  in  what  name  the  title  is  vested,  if  not  in  the  name  of 
the  bank  itself. 

7.  The  amount  loaned  on  real  estate,  specifying  the 
amount  secured  on  real  estate  in  each  county  separately; 
also  specifying  the  name  of  the  person  in  whose  name  the 
property  is  held  in  trust  or  as  security,  in  case  it  is  held 

[137] 


§130  BLYTH.  WITTER  &  CO. 

wi.at  such  bank  re-  j^  any  name  other  than  that  of  the  bank  and  the  instru- 

ports  must  show —  -^ 

cont'd,  ment   creating   the   security   does   not   itself   disclose   the 
name  of  the  bank. 

8.  The  amount  invested  in  bonds,  designating  the 
name  and  amount  of  each  particular  kind. 

9.  The  amount  loaned  on  stocks  and  bonds,  desig- 
nating each  particular  class  and  the  amount  thereof. 

I  0.  The  amount  of  money  loaned  on  other  securities, 
with  a  particular  designation  of  each  class  and  the 
amount  loaned  on  each. 

1  I .  The  amount  and  kind  of  money  on  hand  or  de- 
posited in  any  other  bank  or  place,  with  the  name  of  the 
place  where  deposited  and  the  amount  in  each  place. 

I  2.  Any  other  property  held,  or  any  amount  of  money 
loaned,  deposited,  invested  or  placed,  not  otherwise 
herein  enumerated,  and  the  place  where  situate  and  the 
value  of  said  property,  and  the  amount  so  loaned,  de- 
posited or  placed. 

1  3.  The  date  on  which  examination  of  the  bank  was 
last  made  by  its  board  of  directors  and  the  date  on  which 
report  of  such  examination  was  filed,  as  required  by 
section  one  hundred  thirty-nine  of  this  act. 

1  4.  The  outstanding  and  unpaid  amounts  of  any  loans 
made  by  the  bank,  which  under  the  provisions  of  either 
section  sixty-five  or  eighty-three  of  this  act  are  required 
to  be  reported  to  the  superintendent  of  banks. 

15.  Any  overdrafts  and  any  loans,  investments,  acts 
or  omissions  violative  of  or  not  in  conformity  with  any 
provision  of  this  act  which  may  be  specifically  called  for. 

California  branch  of       Every  foreign  Corporation  transacting  the  business  of 

foreign  bank  to  ren-  .^  <=.  »  c 

der  verified  report  to  banking   in   this   State   shall   make   the   report   herein   re- 

Supt.  *=  '^ 

quired  as  far  as  such  report  may  relate  to  the  affairs  of 

[1381 


STATE  BANKING  DEPARTMENT  §  130-132 


such  corporation  in  this  state,  and  every  foreign  corpora- 
tion must  particularly  render  the  report  required  by  sub- 
divisions three,  four,  five,  six,  seven,  eight,  nine,  ten, 
eleven,  twelve,  thirteen,  fourteen,  and  fifteen  of  this  sec- 
tion. Such  report  shall  be  made  in  writing  and  verified 
by  the  oath  of  one  of  its  duly  authorized  officers  or 
managers  residing  in  this  state.  The  oaths  of  the  officers 
and  the  statements  above  required  shall  state  that  they 
and  each  of  them  have  a  personal  knowledge  of  the  mat- 
ters therein  contained,  and  that  they  believe  every  alle- 
gation, statement,  matter,  and  thing  therein  contained  is 
true.  Any  wilful  false  statement  in  the  premises  shall  be 
perjury  and  shall  be  punished  as  such. 

Section  1  30a.     In  addition  to  the  information  obtained  Supt.  may  require 

any  bank  to  furnish 

from  the  report  required  by  the  provisions  of  section  one  additional  verified 

hundred   thirty  of  this  act,    the  superintendent  of  banks 

shall  also  have  the  power  to  require  any  bank  to  furnish 

a  special  report  in  writing,  verified  as  required  by  section 

one  hundred  thirty  of  this  act,  whenever  in  his  judgment 

such  special  report  is  necessary  to  inform  him  fully  of  the 

actual  financial  condition  and  affairs  of  such  bank.     Any  wiifui  false  state- 

•"     ment  in  report 

wilful  false  statement  in  the  premises  shall  be  perjury  and  deemed  perjury. 
shall  be  punished  as  such. 

Section    131.      The  superintendent  of  banks  shall  call  Supt.  to  call  for 

reports  at  least 

for  the  reports  specified  by  section  one  hundred  thirty  of  three  times  a  year. 
this  act  at  least  three  times  each  year.  The  "past  day 
designated  by  the  superintendent"  of  banks  under  the 
provisions  of  section  one  hundred  thirty  of  this  act  shall 
for  at  least  three  times  be  the  day  designated  by  the 
comptroller  of  currency  of  the  United  States  for  reports 
of  national  banking  associations. 

[Publishers'  Note,  re  Section  131,   amended  1919: 

This  amendment  is  designed  particularly  to  make  coincident  at  least  three 
of  the  called  reports  demanded  by  the  Superintendent  of  Banks  with  the  called 
reports  demanded  by  the  Comptroller  of  the  Currency.  It  is  intended  to  grive 
wider,  more  critical  and  more  intimate  information,  from  the  point  of  view  of 
both   state   and  National  supervision.]  Bank  shall  publish 

Ai  •  rc-l-  1_  1.    condensed  statement 

Section    132.      At  the   time  of   furnishing  such  report  of  financial  condi- 

,,  111.     11        I  t'°"  ^*  time  of  furn- 

to    the   superintendent   of    banks,    every   bank   shall   also  i.hing  above  report. 

[139] 


§  132-133  BLYTH.  WITTER  &   CO. 

publish  a  condensed  statement  of  its  financial  condition, 
at  least  once,  in  some  newspaper  of  general  circulation, 
published  in  the  city  or  town  where  its  principal  place 
of  business  is  located,  and,  if  no  paper  is  published  in 
such  town,  then  in  some  newspaper  of  general  circulation 
in  the  county  where  its  principal  place  of  business  is 
wiiat  published  located.      Such  published  statement  shall  show  the  total 

statement  shall  show.  ^     ,  ,  ,  ^  i       r  i 

amount  or  loans,  the  total  amount  or  overdrafts,  the 
total  amount  invested  in  bonds  and  other  securities,  the 
total  amount  due  from  banks,  the  total  amount  of  checks 
and  other  cash  items,  the  total  amount  of  cash  on  hand, 
capital  paid  in,  surplus  funds;  undivided  profits,  less  ex- 
penses and  taxes  paid;  due  to  other  banks  and  bankers, 
due  to  trust  companies  and  savings  banks;  individual  de- 
posits subject  to  checks;  demand  certificates  of  deposit; 
time  deposits;  certified  checks;  cashier's  checks  outstand- 
ing; and  such  other  items  as  will  show  the  actual  financial 
condition  of  the  bank  making  the  report. 

imp?irmenfo/c°p^^^^       Section  133.     Whenever  it  shall  appear  from  the  report 

^bLk^fmake  good  °^  ^"^  bank,  or  the  superintendent  of  banks  shall  have 

the  deficiency  wU^Mn  reason  to  believe  that  the  capital  of  any  bank  is  impaired 

or  reduced  below  the  amount  required  by  law,   it  shall 

be  the  duty  of  the  superintendent  of  banks  and  he  shall 

have  the  power  to  examine  said  bank  and  ascertain  the 

facts,  and  in  case  he  finds  such  impairment  or  reduction 

of  capital,  he  shall  require  such  bank  to  make  good  the 

deficiency  so  appearing  within  sixty  days  after  the  date  of 

Directors  of  bank  to  such  requisition.     The  directors  of  every  such  bank,  upon 

levy  assessment  to  j  ■>       f 

repair  deficiency,  -yyl^ich  such  requisition  shall  have  been  made,  shall  levy  an 
assessment  upon   the  stock   thereof  to   repair  such   defi- 
ciency, and  shall  cause  notice  of  such  requisition  to  be 
stock  assessments  to  ^iyen  to  each  Stockholder  of  the  bank  and  of  the  amount 

make  good  impaiie  i  ^ 

capital.  Qf  j.]^g  assessment  which  he  must  pay  for  the  purpose  of 
making  good  such  deficiency,  by  a  written  or  printed 
notice  mailed  to  such  stockholder  at  his  last  known  ad- 
dress or  served  personally  upon  him.     If  any  stockholder 

[140] 


STATE  BANKING  DEPARTMENT  §  133 

shall  refuse  or  neglect  to  pay  the  assessment  specified  in  ^'^  ^n^a  coUeotlnY 
such  notice  within  thirty  days  from  the  date  of  mailing  or  jt^^^'''^®"*  °°  ^'^^^ 
serving  such  notice  as  aforesaid,  the  directors  of  such 
bank  shall  have  the  right  to  sell  to  the  highest  bidder  at  °^3g3*°^\^^^  ^t'^ 
public  auction  the  stock  of  such  stockholder,  after  giving  p^^'^ate  sale. 
a  previous  notice  of  such  sale  for  ten  days  in  a  newspaper 
of  general  circulation  published  in  the  county  where  the 
principal  place  of  business  of  such  bank  is  located,  and 
a  copy  of  such  notice  of  sale  shall  also  be  served  on  the 
owner  of  such  stock  by  being  served  personally  on  him  or 
by  mailing  to  his  last  known  address  ten  days  before  the 
day  fixed  for  such  sale;  or  such  stock  may  be  sold  at 
private  sale  and  without  such  public  notice;  provided, 
however,  that  before  making  such  private  sale  thereof 
an  offer  in  writing  shall  first  be  obtained  and  a  copy 
thereof  served  upon  the  owner  of  record  of  the  stock  Method  of  making 
sought  to  be  sold,  either  personally  or  by  mailing  a  copy 
of  such  offer  to  his  last  known  address,  and  if,  after 
service  of  such  offer,  such  owner  shall  still  refuse  or 
neglect  to  pay  such  assessment  within  two  weeks  from 
the  time  of  the  service  of  such  offer,  the  said  directors 
may  accept  such  offer  and  sell  such  stock  to  the  person 
making  such  offer,  or  to  any  other  person  or  persons  mak- 
ing a  larger  offer  than  the  amount  named  in  the  offer 
submitted  to  the  stockholder;  but  such  stock  shall  in  no 
event  be  sold  for  a  smaller  sum  than  the  valuation  put 
on  it  by  the  superintendent  of  banks  in  his  determination 
and  requisition  as  to  said  assessment,  nor  for  less  than 
the  amount  of  said  assessment  so  called  for  and  the  ex- 
pense of  sale.     Out  of  the  avails  of  the  stock  so  sold,  the  Application  of  pro- 

'^  ceeds  of  sale. 

directors  shall  pay  the  amount  of  assessment  levied 
thereon,  and  the  necessary  costs  of  sale,  and  the  balance, 
if  any,  shall  be  paid  to  the  person  or  persons  whose  stock 
has  thus  been  sold.      A  sale  of  stock  as  herein  provided  E.Tect  of  sale,  upon 

stock  sold. 

shall  effect  an  absolute  cancellation  of  the  outstanding 
certificate   or   certificates   evidencing   the   stock   so   sold, 

fi411 


§  134-135  BLYTH,  WITTER  &   CO. 

and  shall  make  the  same  null  and  void,  and  a  new  certi- 
ficate shall  be  issued  by  the  bank  to  the  purchaser  thereof. 

supt.  may  order       Section  1  34.     If  it  shall  appear  to  the  superintendent  of 

ank  to  discontinue  ^^  ^ 


b 
articles  or  State  law, 


violations  of  its  b^nks  that  any  bank  has  violated  or  failed  to  comply  with 


^^'^'  the  provisions  of  its  articles  of  incorporation,  or  any  law 
of  this  state,  he  may,  by  an  order  under  his  hand  and 
official  seal,  which  seal  must  be  adopted  by  him,  addressed 
to  such  bank,  direct  such  bank  to  discontinue  such  viola- 
tion and  to  comply  with  the  law;  or,  if  it  shall  appear 
to  the  superintendent  of  banks  that  such  bank  is  conduct- 
ing business  in  an  unsafe  or  injurious  manner,  he  may, 
in  like  manner  direct  the  discontinuance  of  any  such  un- 
Such  order  shall  re-  safe  or  injurious  practices.     Such  order  shall  require  such 

quire  banks  to  show  ,,,  iri  -i  rii 

cause  why  order  shall  bank  to  show  cause,  bcfore  the  superintendent  or  banks, 

not  be  made  final.  .  ,,  iriii-  i  •  i  i 

at  a  time  and  place  to  be  hxed  by  him,  why  said  order 
should  not  be  observed.  If  upon  such  hearing  it  shall  ap- 
pear to  the  superintendent  of  banks  that  such  bank  is 
conducting  business  in  an  unsafe  or  injurious  manner,  or 
is  violating  or  failing  to  comply  with  the  provisions  of  its 
articles  of  incorporation,  or  any  law  of  this  state,  then 
the  superintendent  of  banks  shall  make  such  order  final, 
and  such  bank  shall  immediately  comply  with  such 
order  made  by  the  superintendent  of  banks.  Such  bank 
If  such  order  is  made  shall  have  ten   days  after  any  such   order  is  made   final 

final,  bank  has  10  ,  . 

days  to  secure  in-  m  which  suit  may  be  Commenced  to  restrain  enforcement 

junction.       r  i  ^  i  i  i  •  i  i 

or  such  order,  and  unless  such  action  be  so  commenced 
and  enforcement  of  said  order  be  enjoined  within  ten 
days,  by  the  court  in  which  such  suit  is  brought,  then  such 
bank  shall  comply  with  such  order. 

Bupt.  may  call  meet-       Section   135.     Whenever  the  Superintendent  of  banks 

ing  of  stockholders  ^ 

of  bank,  shall  deem  it  expedient  he  may  call  a  meeting  of  the 
stockholders  of  any  bank  organized  under  the  laws  of 
this  state,  by  a  personal  notice  of  such  meeting  for  fifteen 
days  previous  thereto.  All  necessary  expense  incurred  in 
the  serving  of  such  notice  shall  be  borne  by  the  bank 
whose  stockholders  are  required  to  convene. 

[1421 


STATE  BANKING  DEPARTMENT  §  I  35a- 136 


Section   135a.     If  the  capital  of  any  bank  shall  be  im-  Jp^oiuntary 


tion. 


dissolu- 


paired,  or  if  any  bank  shall  refuse  to  submit  its  books, 
papers  and  concerns  to  the  inspection  of  any  examiner, 
or  if  any  officer  thereof  shall  refuse  to  be  examined  upon 
oath  touching  the  concerns  of  such  bank,  or  if  such  bank  f^^^°^  ^l  ^upt.  to 

°  '  dissolve  Dank  having: 

shall  violate  the  provisions  of  its  articles  of  incorporation,   i"\paired  capital,  or 

^  *  '     refusing  to  submit 

or  any  law  of  this  state,  or  if  such  bank  shall  suspend  pay-  vlola^h^^faw^of "'^ 
ment  of  its  obligations,  or  if  such  bank  shall  conduct  its  ^*^*®'  ®*<=- 
business  in  an  unsafe  or  unauthorized  manner,  or  if  from 
any  examination  or  report  provided  for  by  this  act  the 
superintendent  of  banks  shall  conclude  that  such  bank  is 
in  an  unsound  or  unsafe  condition  to  transact  the  business 
for  which  it  is  organized,  or  that  it  is  unsafe  and  inex- 
pedient for  it  to  continue  business,  an  action  to  procure  a 
judgment  dissolving  such  corporation  may  be  maintained 
by  the  superintendent  of  banks. 

Section  I  36.     Whenever  it  shall  appear  to  the  superin-  S"p*^'  may  take  pos- 
session of  business 
tendent  of  banks  that  any  bank  has  violated  the  provisions  ^nd  property  of  such 

bank  until  it  resumes 

of  its  articles  of  incorporation  or  any  law  of  this  state,  or  business  or  its  affairs 

.....  be  finally  liquidated. 

is  conductmg  its  business  in  an  unsafe  or  unauthorized 
manner,  or  if  the  capital  of  any  bank  is  impaired,  or  if 
any  bank  shall  refuse  to  submit  its  books,  papers  and  con- 
cerns to  the  inspection  of  any  examiner,  or  if  any  officer 
thereof  shall  refuse  to  be  examined  upon  oath  touching 
the  concerns  of  any  such  bank  or  if  any  bank  shall  sus- 
pend payment  of  its  obligations,  or  if  from  any  examina- 
tion or  report  provided  for  by  this  act  the  superintendent 
of  banks  shall  have  reason  to  conclude  that  such  bank 
is  in  an  unsound  or  unsafe  condition  to  transact  the  busi- 
ness for  which  it  is  organized,  or  that  it  is  unsafe  and  in- 
expedient for  it  to  continue  business,  or  if  any  bank  shall 
neglect  or  refuse  to  observe  any  order  of  the  superintend- 
ent of  banks  specified  in  sections  one  hundrd  thirty-three 
or  one  hundred  thirty-four  of  this  act,  the  superintendent 
of  banks  may  forthwith  take  possession  of  the  property 
and  business  of  such  bank  and  retain  such  possession  until 

[1431 


§  136  BLYTH,  WITTER  &   CO. 

such  bank  shall  resume  business,  or  its  affairs  be  finally 
Procedure  to  be  fci-  liquidated  as  herein  provided.      On  taking  possession  of 

lowed  \>y  Supt.  in  i    i         •  r  i     i  i        i_ 

conserving  assets  the  property  and  business  or  any  such  bank  the  superm- 

and  liquidating  af-  ,  r   i  i  I      n    r         i        •   i         •  •  r  l      f 

fairs  of  such  bank,  tendent  Or  banks  shall  rorthwith  give  notice  or  such  tact 
to  any  and  all  banks,  trust  companies,  associations  and 
individuals,  holding  or  in  possession  of  any  assets  of 
such  bank.  No  bank,  trust  company,  association  or  indi- 
vidual knowing  of  such  taking  possession  by  the  superin- 
tendent of  banks,  or  notified  as  aforesaid,  shall  have  a 
lien  or  charge  for  any  payment,  advance  or  clearance 
thereafter  made,  or  liability  thereafter  incurred  against 
any  of  the  assets  of  the  bank  of  whose  property  and  busi- 
ness the  superintendent  of  banks  shall  have  taken  posses- 
Bank  may  resume  sion  as  aforesaid.      Such  bank  may,  w^ith  the  consent  of 

business  with  consent     .  •  i  r   i  i  i         • 

of  Supt.  the  superintendent  of  banks,  resume  business  upon  such 
conditions  as  may  be  approved  by  him.  Upon  taking 
possession  of  the  property  and  business  of  any  such  bank 
the  superintendent  of  banks  shall  have  authority  to  collect 
moneys  due  to  such  bank  and  do  such  other  acts  as  are 
necessary  to  conserve  its  assets  and  business,  and  shall 
proceed  to  liquidate  the  affairs  thereof  as  hereinafter 
provided.  The  superintendent  of  banks  shall  collect  all 
debts  due  and  claims  belonging  to  it,  and  upon  the  order 
of  the  superior  court  may  sell  or  compound  any  bad  or 
doubtful  debts.  If  a  purchaser  for  any  bad  or  doubtful 
debts  can  not  be  obtained  and  it  appears  improbable  that 
recovery  thereon  can  be  had  and  that  the  costs  of  actions 
to  enforce  collection  of  the  same  would  probably  be  lost, 
the  court  may  direct  that  suits  thereon  need  not  be 
By  order  of  court,  brought.     On  like  Order  he  may  sell  any  real  or  personal 

Supt.  may  sell  bad  or  riii  i 

doubtful  debts,  or  property  ot  such  bank  on  such  terms  as  the  court  shall 

sue  or  refrain  from     ,.  ,  ..  iiiri 

suing  thereon;  may  direct;  and  may,   ir  necessary  to  pay  the  debts  of  such 

sell  real  or  personal  ii  r  i  ..  i-i<<iii.ii 

property  of  such  bank,    entorce    the    constitutional    individual    liability    of 

bank,  and  enforce  iiii  i  •  ii  i  -l-i 

stockholders'  lia-  stockholders  by  action  to  be  brought  withm  three  years 
after  the  date  of  his  taking  possession  of  the  affairs  of 
such  bank.  The  superintendent  of  banks  shall  determine 
the  necessity  of  such  action  and  the  amount  necessary  to 

[144] 


STATE  BANKING  DEPARTMENT  §  136 

recover  from  the  stockholders  to  fully  pay  all  liabilities  of 
such  bank.  Such  action  may  be  in  equity  and  against  all 
stockholders  upon  whom  service  of  process  in  the  State 
of  California  can  be  had,  and  the  court  may  therein  deter- 
mine and  provide  for  any  equities  as  between  the  stock- 
holders including  the  proportions  of  each  stockholder  to 
any  surplus  of  money  or  assets  that  may  remain  after  the 
payment  of  all  liabilities  and  the  expenses  of  liquidation. 
The  superintendent  of  banks  may  also  maintain  an  action 
against  any  stockholder  residing  out  of  the  state  or  upon 
whom  service  of  process  can  not  be  had  within  the  state, 
in  any  court  of  the  United  States  or  of  any  state  or  coun- 
try. Any  judgment  so  obtained  by  the  superintendent  of 
banks  against  such  or  any  of  such  stockholders  which  is 
of  doubtful  value  may  be  compromised  and  compounded 
by  the  superintendent  of  banks  on  such  terms  and  condi- 
tions as  the  superior  court  may  direct  or  authorize.     The  Supt.  shall  file  with 

^  •'  county  recorder  notice 

superintendent  of  banks  shall   file  a  notice  of  pendency  of  ^pendency  of  such 

of  action   in   the   county  recorder's   office   of   the  county 

where  such  action  is  brought.      At  any  time  prior  to  the  Creditor  may  in  in- 

,  dividual  capacity 

trial  of  any  such  action,  any  creditor  may  serve  upon  the  maintain  action 

1     ri  •   1        1  1  •       against  stockholders. 

supermtendent  or  banks  and  rile  with  the  court  wherein 
such  action  is  pending,  notice  that  he  elects  to  maintain 
an  action  against  the  stockholders  or  any  of  them,  in  his 
individual  capacity  and  thereupon  the  amount  sued  for 
in  such  action  shall  be  reduced  accordingly  and  such 
creditor  shall  not  be  entitled  to  share  in  the  proceeds  re- 
sulting from  such  action  brought  by  the  superintendent 
of  banks.  For  the  purpose  of  executing  and  performing  ^f  ^^i "q^e'n"  hank 
any  of  the  powers  and  duties  hereby  conferred  upon  him,  prJ^ecuteTnVd'eTend 
the  superintendent  of  banks  may,  in  the  name  of  the  de-  "Y*^^^-  f '^■' f^fi""*® 

^  ■^  all  instruments 

linquent  bank  or  in  his  own  name,  prosecute  and  defend  "te's^Te'^of^relTor*" 
any  and  all  suits  and  other  legal  proceedings  and  may,  in  P"sonai  property  or 

•'  o         r-  o  .^  '  compromise  hy  order 

the  name  of  the  delinquent  bank  or  in  his  own  name  as  "f  court,  etc. 
trustee    execute,    acknowledge   and    deliver    any   and    all 
deeds,  assignments,  releases  and  other  instruments  neces- 
sary and  proper  to  effectuate  any  sale  of  real  or  personal 

[145] 


§  136  BLYTH.  WITTER  &  CO. 

property  or  sale  or  compromise  or  compound  authorized 
by  order  of  the  court  as  herein  provided;  and  any  deed 
or  other  instrument,  executed  pursuant  to  the  authority 
hereby  given,  shall  be  valid  and  effectual  for  all  pur- 
poses, as  though  the  same  had  been  executed  by  the 
officers  of  the  delinquent  bank  by  authority  of  its  board 
of  directors.  In  case  any  of  the  real  property  so  sold  is 
located  in  a  county  other  than  the  county  in  which  the 
application  to  the  court  for  leave  to  sell  the  same  is 
inade,  the  superintendent  of  banks  shall  cause  a  certified 
copy  of  the  order  authorizing  or  ratifying  such  sale  to 
be  filed  in  the  office  of  the  recorder  of  the  county  in 
which  the  said  real  property  is  located.  The  superintendent 
of  banks  may,  under  his  hand  and  official  seal,  appoint 
one  or  more  special  deputy  superintendents  of  banks, 
as  agent  or  agents,  with  the  powers  specified  in  the  certi- 
ficate of  appointment  hereinafter  mentioned,  to  assist 
him  in  the  duty  of  liquidation  and  distribution,  the  certi- 
ficate of  appointment  to  be  filed  in  the  office  of  the  super- 
intendent of  banks,  and  a  certified  copy  in  the  office  of 
the  clerk  of  the  county  in  which  the  principal  office  of 
such  bank  is  located. 

Supt.  may  delegate       fhc  Superintendent  of  banks  may  from  time  to  time, 

dutiea  to  deputy.  '^  •' 

by  a  certificate  of  appointment  under  his  hand  and  offi- 
cial seal,  specifying  the  powers  conferred,  authorize  a 
special  deputy  superintendent  to  perform  such  duties 
connected  with  such  liquidation  and  distribution  as  the 
superintendent  of  banks  may  deem  proper.  Such  certi- 
ficate of  appointment  shall  be  filed  in  the  office  of  the 
superintendent  of  banks  and  a  certified  copy  in  the  office 
of  the  clerk  of  the  county  in  which  the  principal  office 
Supt.  may  employ  of  such  bank  is  located.      The  superintendent  of  banks 

such  counsel  and  ex-  j 

pert  assistance  as  may  employ  such  counsel  and   procure  such   expert  as- 

may  be  necessary  in 

liquidation,  sistauce  and  advice  as  may  be  necessary  in  the  liquidation 
and  distribution  of  the  assets  of  such  bank,  and  for  that 
purpose  may  retain  such  of  the  officers  or  employees  of 

[146] 


STATE  BANKING  DEPARTMENT  §  136 

such  bank  as  he  may  deem  necessary.  The  superintend- 
ent of  banks  shall  require  from  a  special  deputy  super- 
intendent and  from  such  assistants  such  security  for  the 
faithful  discharge  of  their  duties  as  he  may  deem  proper. 
The   superintendent   of   banks   shall   cause   notice   to   be  Supt.  to  publish 

I  ,  .  .  ,  I  and  mail  notice  to 

given  by  advertisement,  in  such  newspapers  as  he  may  creditors  to  present 

i.  iiri  •  I  !!•  *"*^  prove  claims 

direct,  weekly  ror  three  consecutive  months,  calling  on  against  bank. 
all  persons  who  may  have  claims  against  such  bank  to 
present  the  same  to  the  superintendent  of  banks,  and 
make  legal  proof  thereof  at  a  place  and  w^ithin  a  time, 
not  earlier  than  the  last  day  of  publication,  to  be  therein 
specified.  The  superintendent  of  banks  shall  mail  a 
similar  notice  to  all  persons  whose  names  appear  as 
creditors  upon  the  books  of  the  bank.  If  the  superin- 
tendent of  banks  doubts  the  justice  and  validity  of  any 
claim,  he  may  reject  the  same,  and  serve  notice  of  such 
rejection  upon  the  claimant,  either  by  mail  or  personally. 
An  affidavit  of  the  service  of  such  notice,  which  shall  be 
prima  facie  evidence  thereof  shall  be  filed  with  the  super- 
intendent of  banks.     Any  action  upon  a  claim  so  rejected  Action  upon  rejected 

claim — when  must 

must  be  brought  w^ithin   six  months  after  such   service.  ^<=  brought  by 

claimant. 

Claims  presented  after  the  expiration  of  the  time  fixed 
in  the  notice  to  creditors  shall  be  entitled  to  share  in  the 
distribution  only  to  the  extent  of  the  assets  in  the  hands 
of  the  superintendent  of  banks  equitably  applicable 
thereto.      Upon   taking   possession   of  the   property  and  supt.  to  make  and 

file  inventory  of 

assets  of  any  bank,  the  superintendent  of  banks  shall  assets. 
make  an  inventory  of  the  assets  of  such  bank  in  dupli- 
cate, one  to  be  filed  in  the  office  of  the  superintendent  of 
banks,  and  one  with  the  papers  in  said  proceeding  in  the 
office  of  the  clerk  of  the  county  in  which  the  principal 
office  of  such  bank  is  located;  upon  the  expiration  of  the  counVci^lkTis^of 
time   fixed    for   the   presentation   of   claims   the   superin-  daims  presented, 

*^  ^  specifying  claims 

tendent  of  banks  shall  make  in  duplicate  a  full  and  com-  rejected. 
plete  list  of  the  claims  presented,  including  and  specify- 
ing such  claims  as  have  been  rejected  by  him,  one  to  be 
filed  in  the  office  of  the  superintendent  of  banks,  and  one 

[1471 


§136  BLYTH,  WITTER  &  CO. 


with  the  papers  in  said  proceeding  in  the  office  of  the 
clerk  of  the  county  in  which  the  principal  office  of  such 
Supplemental  lists  bank  is  located.  Thereafter  he  shall  make  and  file  in 
said  offices  as  above  provided  at  least  fifteen  days  be- 
fore each  application  to  the  court  for  leave  to  declare  a 
dividend  a  supplemental  list  of  the  claims  presented  since 
the  last  preceding  list  was  filed,  including  and  specifying 
such  claims  as  have  been  rejected  by  him,  and  in  any 
event  he  shall  make  and  file  as  above  provided  such  a 
list  at  least  once  every  six  months  after  the  filing  of  the 
original  list,  as  long  as  he  shall  remain  in  possession  of 
the  property  and  business  of  any  such  bank.  Such  in- 
ventory and  list  of  claims  shall  be  open  at  all  reason- 
Compensation  of  able  times  to  inspection.    The  compensation  of  the  special 

special  deputies  and 

other  employees  and  deputy    Superintendents,    counsel    and    other    employees 

all  expenses  of  sup-  _  111  r  .«  ii-- 

ervision— how  to  he  and  assistants,  and  all  expenses  of  supervision  and  liqui- 

fixed,  paid  and  re-  ,  1      11   1         r  1   1  1  •  1  r  i  i  i 

ported,  dation,  shall  be  nxed  by  the  supermtendent  or  banks  and 
shall  upon  the  certificate  of  the  superintendent  of  banks  be 
paid  out  of  the  funds  of  such  bank  in  the  hands  of  the  su- 
perintendent of  banks.  All  such  expenses  must  be  reported 
by  the  superintendent  of  banks  to  the  superior  court  of  the 
county  where  the  principal  place  of  business  of  such  bank 
is  located  and  settled  by  such  court  upon  notice  to  such 
Moneys  collected—  bank.      The  moneys  collected   by  the  superintendent   of 

how  deposited.  •'  j  tr 

banks  shall  be  from  time  to  time  deposited  in  one  or 
more  state  banks  of  deposit,  savings  banks  or  trust  com- 
panies,  and,   in  case   of  the  suspension   or  insolvency  of 

Such  dep^o^s^ts^lj^ven  jj^^  depositary,  such  deposit  shall  be  preferred  before  all 
other  deposits.  At  any  time  after  the  expiration  of  the 
date  fixed  for  the  presentation  of  claims  the  superior 
court  may  by  order  authorize  the  superintendent  of 
banks  to  declare  out  of  the  funds  remaining  in  his  hands 
after  the  payment  of  expenses  one  or  more  dividends, 
and  after  the  expiration  of  one  year  from  the  first  pub- 

Deciaration  of  par-  lication  of  notice  to  Creditors  he  may  declare  a  final  divi- 

tial  and  final  divi- 
dends—how  made.  JenJ^  such  dividends  to  be  paid  to  such  persons,  and  in 

such  amounts,  and  upon  such  notice,  as  may  be  directed 

[1481 


STATE  BANKING  DEPARTMENT  §  136 

by  the  superior  court  of  the  county  in  which  the  princi- 
pal  office   of   such   bank,  is  located.      Objections   to   any  Objections  by  inter- 

^  .  1  f    1  1  ested  party  to  claims 

claim  not  rejected  by  the  superintendent  of  banks  may  not  rejected  by 

Supt.  to  be  heard 

be  made  by  any  party  interested  by  filing  a  copy  of  such  and  disposed  of  by 

court  or  referee. 

objections  with  the  superintendent  of  banks,  who  shall 
present  the  same  to  the  superior  court  at  the  time  of  the 
next  application  to  declare  a  dividend.  The  court  to 
which  such  application  is  made  shall  thereupon  dispose 
of  said  objections  or  may  order  a  reference  for  that  pur- 
pose, and  should  the  objections  to  any  claim  be  sustained 
by  the  court  or  by  the  referee,  such  claim  shall  not  be 
allowed  by  the  superintendent  of  banks  until  the  claim- 
ant shall  have  established  his  claim  by  the  judgment  of  Court  to  make  proper 

provision  for  un- 

a  court  of  competent  jurisdiction.     The  court  must  make  proved  or  unclaimed 
proper  provision  for  unproved  or  unclaimed  deposits. 

Should   any   bank   at   the   time   the   superintendent   of  Bailors  of  property 

^  '^  in  dehnquent  bank 

banks  takes  possession  of  its  property  and  business,  have  to  be  "oti^^^^^y 
in  its  possession,   as  bailee  for  safekeeping  and  storage,   property. 
any  jewelry,  plate,  money,  specie,  bullion,  stocks,  bonds, 
securities,    valuable    papers    or    other    valuable    personal 
property  or  should  it  have  rented  any  vaults,  safes  or  safe 
deposit   boxes    or    any    portion    thereof    for    the    storage 
of   property   of   any   kind,    the   superintendent   of   banks 
may  at  any  time  thereafter  cause  to  be  mailed  to  the  per- 
son claiming  to  be  or  appearing  upon  its  books  to  be  the 
owner  of  such  property,  or  the  person  in  whose  name  the 
safe,  vault  or  box  stands,  a  notice  in  writing  in  a  securely 
closed,  postpaid  registered,  letter  directed  to  such  person 
at   his   post-office   address   as   recorded    upon    its   books, 
notifying  such  person   to   remove,   within  a   period   fixed 
by  said  notice  and  not  less  than  sixty  days  from  the  date 
thereof,    all   such   personal   property  and   upon   the   date 
fixed  by  said  notice,   the  contract,   if  any,   between  such 
person  and  bank  for  the  storage  of  said  property  or  for 
the  use  of  the  said  safe,  vault  or  box  shall  cease  and  de- 
termine, and  the  amount  of  the  unearned  rent  or  charges, 

[1491 


§  136 BLYTH.  WITTER  &  CO. 

if  any,  paid  by  such  person  shall  become  a  debt  of  the 
If  such  property  not  bank  to  Said   person.      If  the  property  be  not  removed 

removed  within  time        .i-i-riii  •  i  •  l  c 

axed  by  notice,  Supt.  withm  the  time  hxed  by  the  notice,  the  superintendent  or 

to  dispose  of  same  .  ,  .,...,.,  I 

as  court  may  direct,  banks  may  make  such  disposition  or  said  property  as  the 

superior    court,    upon    application    thereto,    shall    direct. 

Supt.  may  cause  any  And    the   superintendent   of  banks   may   cause   any  safe, 

safe,  vault  or  box  to  ,  ,  ,  i    •       i   •  •         i 

he  opened  and  its  vault  or  box  to  be  Opened  in  his  presence  or  in  the  pres- 

contents  disposed  of  .  .,  -ii  -i  r 

as  specified,  ence  ot  One  or  the  special  deputy  superintendents  or 
banks,  and  of  a  notary  public  not  an  officer  or  in  the 
employ  of  the  bank  or  of  the  superintendent  of  banks, 
and  the  contents  thereof,  if  any,  to  be  sealed  up  by  such 
notary  public  in  a  package  upon  which  such  notary  public 
shall  distinctly  mark  the  name  and  address  of  the  person 
in  whose  name  such  safe,  vault  or  box  stands  upon  the 
books  of  the  bank  and  shall  attach  thereto  a  list  and 
description  of  the  property  therein;  and  the  package  so 
sealed  and  addressed,  together  with  the  list  and  descrip- 
tion, may  be  kept  by  the  superintendent  of  banks  in  one 
of  the  general  safes  or  boxes  of  the  bank  until  delivered 
to  the  person  whose  name  it  bears,  or  until  otherwise  dis- 
Bank  deeming  itself  posed  of  as  directed  by  the  court.     Whenever  any  such 

aggrieved  may  en-  i    i         .  i  .1 

join  proceedings  bank  ot"  whosc  property  and  business  the  superintendent 

within  ten  days       riii  1  •  r  -ii  -ir 

after  Supt.  takes  ot  banks  has  taken  possession  as  aforesaid,  deems  itself 

possession,  •  1      1  1  •  •  .1 

aggrieved  thereby,  it  may,  at  any  time  withm  ten  days 
after  such  taking  possession,  apply  to  the  superior  court 
in  the  county  in  which  the  principal  office  of  such  bank  is 
located  to  enjoin  further  proceedings;  and  said  court, 
after  citing  the  superintendent  of  banks  to  show  cause 
why  further  proceedings  should  not  be  enjoined,  and 
Hearing  to  be  had  hearing  the  allegations  and  proofs  of  the  parties  and  de- 

and  judgment  to  be  _     _  ■^ 

entered  therein,  termining  the  facts  may,  upon  the  merits,  dismiss  such 
application  or  enjoin  the  superintendent  of  banks  from 
further  proceedings,  and  direct  him  to  surrender  such 
Provisions  concern-  ^usiness  and  property  to  such  bank.  An  appeal  as  above 
judgment,  provided  shall  operate  as  a  stay  of  the  judgment  of  the 
superior  court,  and  no  bond  need  be  given  if  the  appeal 
be    taken   by   the   superintendent   of   banks;    but   if    the 

[1501 


STATE  BANKING  DEPARTMENT  §  136 

appeal  be  taken  by  such  bank,  a  bond  shall  be  given,  as 
required  by  section  nine  hundred  forty-three  of  the  Code 
of    Civil    Procedure.       Whenever    the    superintendent    of  tnl",T!i'^i^t°L.. 
banks  shall  have  paid  to  each  and  every  depositor  and  fngy°tockhMder"s 
creditor   of   such   bank   whose   claim   or   claims   as   such  supf  shTn°cortin*u''e^'" 
creditor  or  depositor  shall  have  been  duly  proved  and  beTiecte°d°for  thaf 
allowed,   the  full  amount  of  such  claims,   and  shall  have  P^^^pose. 
made    proper   provision    for   unclaimed    and    unpaid    de- 
posits or  dividends,  and  shall  have  paid  all  the  expenses 
of  the  liquidation,  the  superintendent  of  banks  shall  call 
a  meeting  of  the  stockholders  of  such  bank  giving  notice 
thereof  for  thirty  days  in  one  or  more  newspapers  pub- 
lished  in   the   county  where   the  principal   office   of  such 
bank  is  located.      At  such  meeting  the  stockholders  shall  Manner  of  voting  at 

1  .  II  1  •  1  r   1  1  1      11    1         such  meeting. 

determme  whether  the  supermtendent  or  banks  shall  be 
continued  as  liquidator  and  shall  wind  up  the  affairs  of 
such  bank,  or  whether  an  agent  or  agents  shall  be  elected 
for  that  purpose,  and  in  so  determining  the  said  stock- 
holders shall  vote  by  ballot,  in  person  or  by  proxy,  each 
share  of  stock  entitling  the  holder  to  one  vote,  and  the 
majority  of  the  stock  shall  be  necessary  to  a  determina- 
tion. 

In   case   it   is   determined   to   continue   the  liquidation  Dissolution. 
under  the  superintendent  of  banks,  he  shall  complete  the 
liquidation  of  the  affairs  of  such  bank,  and  after  paying 
the  expenses  thereof,  shall  distribute  the  proceeds  among 
the  stockholders  in  proportion  to  the  several  holdings  of 
stock  in  such  manner  and  upon  such  notice  as  may  be 
directed  by  the  superior  court.      In  case  it  is  determined 
to   appoint   an   agent   or   agents   to   liquidate,    the   stock- 
holders shall   thereupon   select  such   agent  or  agents  by 
ballot,    a   majority   of   the   stock   present   and    voting,    in 
person  or  by  proxy,  being  necessary  to  a  choice.      Such  Supt^shaU  t^^ansfer^ 
agent   or   agents   shall    execute   and    file   with    the   super-  shall  execute  bond. 
intendent  of  banks  a  bond  to  the  people  of  the  state  in 
such   amount,    with   such   sureties   and   in   such    form   as 

[151] 


§136  BLYTH,  WITTER  &   CO. 

shall  be  approved  by  the  superintendent  of  banks,  con- 
ditioned for  the  faithful  performance  of  all  the  duties 
of  his  or  their  trust,  and  thereupon  the  superintendent 
of  banks  shall  transfer  and  deliver  to  such  agent  or 
agents  all  the  undivided  and  uncollected  or  other  assets 
of  such  bank  then  remaining  in  his  hands;  and  upon  such 
transfer  and  delivery,  the  said  superintendent  of  banks 
shall  be  discharged  from  any  and  all  further  liability  to 
Agent  to  convert  such  bank  and  its  creditors.      Such  agent  or  agents  shall 

such  assets  into  cash  .    .  i  .  •  •     ^      L  •  ^1      •  •  •     .. 

and  account  for  and  convert  the  assets  coming  into  his  or  their  possession  into 
IS  ri  u  e  proper  y.  ^,ggj.j^  ^^^^^^  shall  account  for  and  make  distribution  of  the 
property  of  said  bank  as  is  herein  provided  in  the  case  of 
distribution  by  the  superintendent  of  banks,  except  that 
the  expenses  thereof  shall  be  subject  to  the  direction  and 
control  of  a  court  of  record  of  competent  jurisdiction. 
In  case  of  the  death,  removal  or  refusal  to  act  of  any  such 
agent  or  agents,  the  stockholders,  on  the  same  notice,  to 
be  given  by  the  superintendent  of  banks  upon  proof  of 
such  death,  removal  or  refusal  to  act  being  filed  with 
him,  and  by  the  same  vote  hereinbefore  provided,  may 
elect  a  successor,  who  shall  have  the  same  powers  and  be 
subject  to  the  same  liabilities  and  duties  as  the  agent 
Disposition  of  divi-  originally    elected.       Dividends    and    unclaimed    deposits 

dends  and  unclaimed  *^ 

deposits  remaining  remaining  Unpaid  in  the  hands  of  the  superintendent  of 

unpaid  SIX  months  o  i 

after  order  of  final  banks  for  six  months  after  the  order  for  final  distribution 

distribution, 

shall  be  by  him  deposited  w^ith  the  state  treasurer  in  the 
same  manner  and  subject  to  the  same  disposition  as  pro- 
vided for  in  section  one  thousand  two  hundred  thirty- 
four  of  the  Code  of  Civil  Procedure.  The  superintend- 
ent of  banks  may  pay  over  the  moneys  so  held  by  him 
to  the  persons  respectively  entitled  thereto  upon  being 
furnished  satisfactory  evidence  of  their  right  to  the  same. 
In  cases  of  doubt  or  conflicting  claims  he  may  require  an 
order  of  the  superior  court  authorizing  and  directing  the 
payment  thereof. 

[Publishers'  Note  to  Section  136:  This  section  remains  unchanged.  In  con- 
nection with  the  general  subject  of  liquidation  of  Banks,  see,  in  addition  to  the 
following  sections,  the  extract  in  the  Appendix  at  the  end  of  this  Act,  Chapter 
496,  Statutes  1917,  General  Laws.] 

[152] 


STATE  BANKING  DEPARTMENT  §  136a- 136b 

Section    136a.      Any  bank  which  has  ceased  to  do  a  Bank  ceasing  busi- 

■'  ness  shall  iramedi- 

banking  business  whether  through  voluntary  action  on  its  ^^^^^  liquidate. 
part  or  through  expiration  of  its  corporate  existence,  shall 
immediately  liquidate  its  affairs  and  any  unclaimed  de- 
posits or  dividends  shall  be  paid  into  the  state  treasury 
in  the  manner  and  for  the  purposes  provided  in  section 
one  hundred  thirty-six  of  this  act  within  six  months  after 
the  date  such  bank  ceased  to  conduct  a  banking  business, 
and  in  case  the  superintendent  of  banks  shall  have  rea-  if  liquidation  un- 
son  to  conclude  that  the  liquidation  of  such  bank  is  not  sup't.^may  t"ake  pos- 

1      •  r   1  i't'1  itii  ii         session  and  liquidate. 

bemg  sarely  or  expeditiously  conducted,  he  may  take 
possession  of  the  property  of  such  bank  and  liquidate 
its  affairs  in  the  same  manner  as  provided  in  section  one 
hundred   thirty-six  of  this  act.      Whenever  any  bank  of  Bank  deeming  itself 

hi  .  1  r    1  1         I  1  aggrieved  bv  inter- 

ose   property   the   superintendent   or   banks  has   taken  vention  of  Supt. 

C  -J        1  -1.      1£  •  J     iL  L  may  apply  for  in- 

possession  as  aroresaid,   deems  itself  aggrieved   thereby,   junction. 
it  may  within  the  time  and  in  like  manner  and  effect  as 
provided    in    section    one   hundred    thirty-six   of    this   act 
apply  to  the  superior  court  to  enjoin  further  proceedings. 

Section    136b.      In  any  action   or  proceeding  brought  Jurisdiction  vested 

I  .    .  f      1   •  1        •  .     .        I     .        .         in  superior  court  of 

under  any  provision  or  this  act,   exclusive  original  juris-  county  where  prin- 

...  1111  1-1  •  ri  cipal  place  of 

diction  shall  be  vested  in  the  superior  court  of  the  county  business  of  bank  is 
in  which  is  located  the  principal  place  of  business  of  the 
bank  affected  thereby,  and  all  proceedings  relating  to  the 
same  matter,  under  any  provision  of  this  act,  including 
proceedings  for  liquidation  of  the  affairs  of  any  such 
bank,  shall  be  filed  with  and  treated  as  a  part  of  the 
record  in  such  original  proceedings,  and  all  papers  relat- 
ing to  any  such  action  or  proceeding,  including  the  copy 
of  certificate  of  appointment  of  any  special  deputy  and 
the  inventories  required  to  be  filed  in  the  matter  of  any 
such  liquidation,  shall  be  filed  with  and  made  a  part  of 
the  record  of  such  original  proceeding,  without  the  pay- 
ment of  any  additional  fees  therefor,  and  in  any  such 
action  no  damage  may  be  awarded,  but  the  action  other- 
wise shall  be  tried  and  determined  according  to  the  pro- 
visions of  the  Code  of  Civil  Procedure. 

[153] 


§  137  BLYTH.  WITTER  &  CO. 

Voluntary  dissoiu-       Section    137.       1.    Any  bank  shall  have  the  right,   on 

tion  may  be  had 

under  provisions  of  application  of  the  stockholders  or  members  to  apply  to 

Code  of  Civil  Pro-      ^^  _        _  .        .        , 

cedure.  {[^q  superior  court  of  the  county  wherein  its  principal 
place  of  business  is  situated,  to  dissolve  said  bank  in  the 
manner  provided  for  in  title  six,  part  three  of  the  Code 
of  Civil  Procedure. 

Payment  to  county       2.    At  the  expiration  of  four  months  after  the  settle- 

■treasurer  of  specified  r      i  r         i  r      i  •  f  11 

funds  by  receiver  xnent  of  the  final  account  of  the  receiver  of  any  bank 

appointed  prior  to  .  ,  .  t    i        i        \r,r\r\  i-     •  i  i        i  l 

July  1,1909.  appointed  prior  to  July  I,  lyUv,  any  dividends  due  de- 
positors, or  other  creditors,  or  stockholders  of  such  bank 
and  remaining  unpaid  or  uncalled  for  and  in  the  hands  of 
such  receiver  may  be  paid  by  him  into  the  treasury  of  the 
county  in  which  such  bank  is  situated  which  money  shall 
be  held  in  the  treasury  of  said  county,  and  at  the  same 
time  it  shall  be  the  duty  of  such  receiver  to  furnish  to  the 
county  treasury  of  said  county  a  list  of  names  of  all  de- 
positors or  other  persons  to  whom  such  money  belongs 
or  who  are  entitled  thereto  and  thereupon  such  receiver 
shall  be  entitled  to  his  discharge. 

Said  funds  to  be  paid        3     'Yhe  moneys  referred  to  in  subdivision  two  of  this 

out  on  court  order. 

section  shall  be  paid  out  on  the  order  of  the  court  ap- 
pointing such  receiver. 

wben  such  funds        4.    All  moneys  paid  under  subdivision  two  of  this  sec- 
escheat  to  State. 

tion,  uncalled  for  within  five  years  after  being  paid  in, 

shall  by  operation  of  law,  and  without  action  had,  escheat 
to  the  state.  All  moneys  held  by  any  county  treasurer 
under  subdivision  two  of  this  section,  when  such  moneys 
have  escheated  to  the  state  as  hereinbefore  provided, 
shall  be  paid  by  the  county  treasurer  into  the  state  treas- 
ury, and  thereafter  only  be  drawn  out  in  such  manner 
as  may  be  provided  for  by  law  for  the  estates  of  de- 
ceased persons  escheated  to  this  state. 

Investment  of  such        5_   The  State  boatd  of  control  must  in vest  such  moneys 

funds. 

in  the  same  manner  that  the  state  school  land  fund  is 
invested  as  provided  by  law.     But  any  claimant  shall  be 

1154] 


STATE  BANKING  DEPARTMENT  §  138-139 

entitled  to  recover  as  herein  provided  only  the  principal 
so  paid  into  the  state  treasury. 

Section    138.      If  any  bank  shall  fail  to  make  any  re-  Penalty  for  bank 

III  .    .  f  .  Ill    failing  to  make 

port  required  by  the  provisions  or  section  one  hundred  report  as  required 

i.  1111-  <•!•  •!•  ^y  ^^'^'  ^^'^  °'^  ^^'^■ 

thirty   or   one   hundred    thirty   a    or    this   act,    within    ten  i30a— to  forfeit 

1  r  111-  ifi  1-1  r   *^°°  P"  "^^y-  ®*'=- 

days  rrom  the  day  designated  ror  the  making  thereor 
by  the  superintendent  of  banks,  or  to  include  therein 
any  matter  required  by  the  provisions  of  either  of  said 
sections,  it  shall  forfeit  to  the  people  of  the  state  the 
sum  of  one  hundred  dollars  for  each  day  that  any  such 
report  shall  be  so  delayed  or  withheld  by  the  failure  or 
neglect  of  such  bank. 

In  the  event  of  the  failure  of  any  such  bank  to  make  i"  event  of  such 

•^  failure  Supt.  may 

any  such  report  required  from  it,  the  superintendent  of  '"Z^®  examination 

•'  ^  ^  'I-  j^t  bank  s  expense. 

banks  may,  in  his  discretion,  immediately  cause  the 
books,  papers  and  affairs  of  such  bank  to  be  examined  at 
the  expense  of  such  bank. 


zamin» 
oans, 
discounts,  etc. 


Section  1  39.    It  shall  be  the  duty  of  the  board  of  direc-  Pi^v'^ff^v",  'i' 

■^  bank  aiiairs,  1 

tors  of  every  bank  to  examine  fully,  or  to  cause  a  com 
mittee  of  at  least  three  of  its  members,  none  of  whom 
shall  be  an  officer  of  the  bank,  to  examine  fully  into  the 
books,  papers  and  affairs  of  the  bank  of  which  they  are 
directors,  and  particularly  into  the  loans  and  discounts 
thereof,  with  a  special  view  to  ascertaining  the  value  and 
security  thereof,  and  of  the  collateral  security,  if  any 
given,  in  connection  therewith,  and  into  such  other  mat- 
ters as  the  superintendent  of  banks  may  require;  such 
examination  to  be  made  at  least  once  a  year,  but  no  such 
subsequent  yearly  examinations  shall  be  made  within 
three  months  of  the  next  preceding  examination.  Such  p/J^'^^^fst'^n^'.^" 
directors  shall  have  power  to  employ  such  assistance  in  making  examination. 
making  such  examinations  as  they  may  deem  necessary. 
Within   thirty  days  after  the   completion  of  such  exami-  f,X"  rbe'mldj' 

...  .1  r  «._   U       j-U^    J;_«„      and  filed  with  records 

nation,  a  report  in  writing  thereof,  sworn  to  by  the  direc-  ^^  ^auk. 
tors  making  the  same,   shall  be  made  by  the  board  of 

[155] 


§139  BLYTH.  WITTER  &  CO. 

directors  of  such  bank,  and  placed  on  file  with  the 
records  of  said  bank,  and  shall  be  subject  to  examina- 
tion by  the  superintendent  of  banks. 

What  such  report       Such  report  shall  particularly  contain  a  statement  of 

shall  contain.  '^  •' 

the  assets  and  liabilities  of  the  bank  examined,  as  shown 
by  its  books,  together  with  any  deductions  from  the 
assets,  or  additions  to  liabilities,  w^hich  such  directors  or 
committee,  after  such  examination,  may  determine  to 
make.  It  shall  also  contain  a  statement,  in  detail,  of 
loans,  if  any,  which  in  their  opinion  are  worthless  or 
doubtful,  together  with  their  reasons  for  so  regarding 
them;  also  a  statement  of  loans  made  on  collateral  se- 
curity, which  in  their  opinion  are  insufficiently  secured, 
giving  in  each  case  the  amount  of  the  loan,  the  name  and 
market  value  of  the  collateral,  if  it  has  any  market  value, 
and  if  not,  a  statement  of  that  fact,  and  its  actual  value 
as  nearly  as  possible.  Such  report  shall  also  contain  a 
statement  of  overdrafts,  of  the  names  and  amounts  of 
such  as  they  consider  worthless  or  doubtful,  and  a  full 
statement  of  such  other  matters  as  affect  the  solvency 
and  soundness  of  the  bank. 

mfkfs"ctrxa^lni°  ^^  the  directors  of  such  bank  shall  fail  to  make  such 
may  make"xtra  «:  examination  or  fail  to  cause  it  to  be  made,  or  shall  fail 
amination  at  bank's  j.^  ^jg  g^ch  report  of  such  examination  in  the  manner  and 

expense.  ^ 

within  the  time  specified,  the  superintendent  of  banks 
shall  have  authority  to  make  or  cause  to  be  made  an 
extra  examination  of  such  bank,  at  the  expense  of  such 
bank. 

Whenever  the  board  of  directors  of  any  bank  may  de- 
termine by  resolution,  duly  entered  in  its  minutes,  that  a 
special  examination  shall  be  made  or  caused  to  be  made 
by  the  superintendent  of  banks  in  lieu  of  the  examina- 
tion herein  required  to  be  made  by  the  board  of  direc- 
tors of  such  bank,  a  certified  copy  of  such  resolution 
shall    be    transmitted    to    the    superintendent    of    banks, 

fl561 


STATE  BANKING  DEPARTMENT  §  140 

whereupon  it  shall  be  the  duty  of  the  superintendent  of 
banks  to  make  or  cause  to  be  made  a  special  examina- 
tion of  the  affairs  of  such  bank  in  lieu  of  the  examina- 
tion of  such  bank  by  the  board  of  directors  thereof.  Such 
special  examination  shall  be  made  at  such  time  as  the 
superintendent  of  banks  may  determine  but  in  any  event 
such  examination  shall  be  made  within  sixty  days  after 
the  receipt  by  the  superintendent  of  banks  of  the  resolu- 
tion hereinbefore  referred  to.  The  cost  of  making  such 
examination  shall  be  a  charge  against  the  bank  for  which 
such  examination  is  made. 

Upon  the  completion  of  such  examination  the  superin- 
tendent of  banks  shall  cause  a  report  thereof  in  writing 
to  be  prepared  and  delivered  to  the  board  of  directors 
of  such  bank  at  such  time  as  may  be  fixed  by  the  super- 
intendent of  banks,  but  not  later  than  thirty  days  after 
the  completion  of  such  examination. 

Section   1  40.    The  superintendent  of  banks  shall  report  Supt.  shall  make 

annual  report  to 

during  the  month  of  October  of  each  year,  to  the  gov-  Governor. 
ernor,   for  submission  to  the  next  ensuing  session  of  the 
legislature: 

1 .  A   summary   of   the   state   and    condition    of   every  Such  annual  report 

II  .1  i.  If  I'l  shall  contain: 

bank  required  to  report  to  him,  and  from  which  reports 
have  been  received  the  preceding  year,  with  an  abstract 
of  the  whole  amount   of  capital   returned   by  them,    the  Summary  of  grenerai 

conditions; 

whole  amount  of  their  debts  and  liabilities,  and  the  total 
amount  of  means  and  resources,  specifying  the  amount 
of  specie  held  by  them  at  the  time  of  the  last  report  to 
him,  and  such  other  information  in  relation  to  such  banks 
as,  in  his  judgment,  may  be  useful. 

2.  A  statement  of  all  banks  authorized  by  him  to  do   statement  of  new 
business  during  the  previous  year,  with  their  names  and 
locations    and    dates    of    incorporation,    and    particularly 
designating    such    as    have    commenced    business    during 
the  year. 

[1571 


banks ; 


§  140-141 BLYTH.  WITTER  &  CO. 

statement  of  closed        3     ^  statement  of  the  banks  whose  business  has  been 

banks ; 

closed  during  the  year. 
Desirable  amend-        4.    Any  amendments  to  the  banking  law,  which,  in  his 

ments  to  Bank  Act;    .  1  i       •      i   1 

judgment,  may  be  desirable. 
Names  and  compen-       3     yj^g  namcs  and   compensation  of  all  persons  em- 

sation  of  employees;  ^  ^ 

ployed  by  him,  and  the  whole  amount  of  the  receipts  and 
expenses  of  the  department  during  the  year. 

Data  concerning       6.   The  namcs  of  banks  placed  in  his  hands  in  process 

banks  in  liquidation. 

of  liquidation,  and  the  amount  of  dividends  paid  thereon. 
Number  of  copies  of       Such  report,  and  the  usual  number  of  copies  for  the 

report  printed. 

use  of  the  legislature,  shall  be  printed  and  in  readiness 
for  distribution  by  the  state  printer,  and  one  thousand 
copies  shall  be  printed  for  the  use  of  the  department, 
the  expense  of  which  shall  be  charged  among  the  gen- 
eral expenses  of  the  department. 

Weekly  bulletin  to       Section    141.       1 .   The  superintendent  of  banks  shall 

be  publicly  posted  in 

Supt.'s  office,  keep  in  his  office,  in  a  place  accessible  to  the  general  pub- 
lic, a  bulletin  board  upon  which  he  shall  cause  to  be 
posted  at  noon  on  Friday  of  each  week  a  detailed  state- 
ment, signed  by  him  or,  in  case  of  his  absence  from  San 
Francisco  or  inability  to  act,  by  the  deputy  superintend- 
ent in  charge,  giving  the  following  items  of  general  in- 
Contents  of  bulletin:  formation  with  regard  to  the  work  of  the  department 
since  the  preceding  statement: 

(a)    The   name   of  every  bank   that  has   filed   in   the 
Applications  filled,  ^^^j^i^ing  department  an  application  for  authorization  to 
commence  business,   its  location  and   the  date   of  filing 
such  application. 

New  banks  author-        (b)    The  name  and  location  of  every  bank  authorized 

ized. 

by  the  superintendent  of  banks  to  commence  business, 
its  capital,  surplus,  and  the  date  of  authorization. 

[158] 


STATE  BANKING  DEPARTMENT  §  141-142 

(c)  The  name  of  every  bank  to  which  a  certificate  of  certificates  refused. 
authorization  has  been  refused  by  the  superintendent  of 

banks,  and  the  date  of  notice  of  refusal. 

(d)  The   name    and    residence   of   every   person    ap-  New  employees,  etc. 
pointed  by  the  superintendent  of  banks  as  a  deputy,  ex- 
aminer or  employee  in  the  banking  department,  the  title 

of  the  office  to  which  appointed,  the  compensation  paid, 
and  the  date  of  appointment. 

(e)  The  date  on  which  a  call  for  a  report  by  banks  Data  concerning 
was  issued  by  the  superintendent  of  banks,  and  the  day 
designated  as  the  day  with  reference  to  which  such  re- 
port should  be  made. 

(f)  The    name    and    location    of    every    bank    whose  Concerning  banks 

^    ■^  •'  whose  creditors  are 

creditors   or   depositors   have  been   paid   in   full   by   the  p,^'^,  anjj  -whose 

•^  '^  •'  stockholders  have 

superintendent  of  banks  and  a  meeting  of  whose  stock-  c^Ued  meeting,  etc. 
holders   shall    have   been   called,    together   with    date    of 
notice  of  meeting  and  date  of  meeting. 

(z)    The  name  and  location  of  every  bank  subject  to  Banks  liquidated 

'■*»•'  "^  or  liquidating, 

the  banking   law  whose  affairs  and   business  shall   have 
been  finally  liquidated,  or  in  course  of  liquidation. 

(h)    The  name  and  location  of  every  bank  which  has  Proposed  changes  in 

name. 

applied  for  approval  of  a  change  of  name,  and  the  name 
proposed. 

2.    Every   such  bulletin,   after  having  been  posted  as  Bulletins  after  being 

posted  to  be  kept  in 

aforesaid  for  one  week,  shall  be  placed  on  a  file  for  such  office. 
statements,  to  be  kept  in  the  office  of  the  superintendent 
of  banks.    All  such  statements  shall  be  public  documents, 
and  at  all  reasonable  times  shall  be  open  to  public  in- 
spection during  usual  banking  hours. 

Section  1  42.     None  of  the  records  of  the  state  banking  Records  of  state 

Banking  Dept.  not 

department  shall  be  deemed  to  be  public  documents  nor  deemed  public  docu- 

^  .  .  r     1         ments.  or  open  to 

shall  any  of  such  records  be  open  to  the  inspection  of  the  public  inspection. 
public.      Every  official  report  made  by  the  superintend- 

[159] 


§  142-145  BLYTH,  WITTER  &   CO. 


Supt.s  reports,  etc.,  gjjj.   <-,£  banks  and   every  report   duly  verified   of  an   ex- 

to  be  prima  facie 

evidence  in  court,  amination   made,    shall   be   prima   facie   evidence   of   the 

etc. 

facts  therein  stated,  for  all  purposes  in  any  action  or  pro- 
ceedings wherein  the  superintendent  of  banks  is  a  party. 

[Publishers'    Note,  re   Section   142,   amended  1919: 

This  amendment,  providing  that  none  of  the  records  of  the  State  Banking 
Department  shall  be  deemed  to  be  public  documents,  or  be  open  to  the  inspection 
of  the  public,  affords  a  protection  that  has  become  very  necessary,  because  of  the 
endeavors  of  ill-advised  or  evilly-disposed  persons  to  obtain  information  from  the 
State  Banking  Department  as  to  the  condition  of  banks.  The  relationship  between 
the  Department  and  the  banks  is  essentially  a  confidential  one,  and  all  the  records 
should  be  confidential  records.  The  amendment,  of  course,  in  no  way  restricts  or 
attem.pts  to  limit  the  right  of  the  courts  to  exercise  such  control  over  the  banks 
in  evidentiary  matters  as  they  now  possess.] 

(Section   143.      Repealed   1913.) 
Penalties  and  for-       Section    144.      Whenever   by   the   terms   of   this  act  a 

feitures  imposed  by  re  i       i  1_     11    L 

Act— how  recovered,  penalty  or  forfeiture  is  imposed,  the  same  shall  be  recov- 
ered in  an  action  brought  at  the  request  of  the  super- 
intendent of  banks  by  the  attorney  general,  in  the  name 
of  the  people  of  the  state,  and  the  sum  recovered  shall 
be  paid  into  the  state  banking  fund  and  used  in  pay- 
ment of  claims  against  the  said  fund.      Any  fine  or  pe- 

when  fine  or  penalty  cuniary  penalty,  which  may  be  incurred  by  any  bank  on 

may  be  compromised  .        r    .1  •     1     i-  £  •    • _£  4.U:„   „„«-     .„^», 

with  Supt.  account  of  the  violation  of  any  provision  ot  this  act,  may 
be  compromised  and  a  less  amount  than  that  prescribed 
by  this  act  accepted  by  the  superintendent  of  banks  at 
any  time  prior  to  the  institution  of  action  to  recover  the 
same. 

Powers,  duties,  etc.,        Section    145.      The  powers,   privileges,   duties  and  re- 

of  corporations  doing 

business  under  laws  strictions  Conferred   and   imposed   upon  any  corporation 

of  this  State, 

abridged,  enlarged,  qj-  individual  existing  and  doing  busines  under  the  laws 

etc.,  to  conform  to  1  t/-      i 

^'^*-  of  this  state  are  hereby  abridged,  enlarged  or  modified 
as  each  particular  case  may  require  to  conform  to  the 
provisions  of  this  act,  notwithstanding  anything  to  the 
contrary  in  their  respective  articles  of  incorporation  or 

Act  applies  equally  •'  r      1   •  1      11  1  •   U 

to  all  corporations  charters.     All  the  provisions  of  this  act  shall  apply  with 

now  or  hereafter  do-  .  1   •    1 

ing  banking  business  eoual  force  and  effect  to  all  corporations  which  are  now 

in  this  State  unless      "  1  i  1   •  1  •  • 

excepted  herein,  and  Joing  or  w^hich  may  hereafter  do  a  banking  business  m 

to  other  persons,  ^ 

firms,  etc.,  violating  jj^jg  state,  except  where  express  exception  or  exemption 

Act  and  subject  to 

its  penalties,  may  be  made  herein,  and  to  such  other  persons,  associa- 

fl601 


STATE  BANKING  DEPARTMENT  §  145-147 

tions,  copartnerships  or  corporations  who  shall,  by  violat- 
ing any  of  its  provisions,  become  subject  to  the  penalties 
provided  herein.     The  legality  of  investments  heretofore  Legality  of  prior 

-  ,  ,  ,  .  .        ,  bank  investments  or 

made,   or  title  to  property  heretofore  acquired  or  con-  title  not  affected  by 

-.  ,  ,,  fill  11      ^^^'  b'lt  non-comply- 

veyed  through  treumsactions  heretofore  had  by  any  bank  ing  investments  made 

..  ri»f  1  1      '  prior  to  July  1,  1909, 

pursuant  to  any  provision  of  law  m  force  when  such  m-  to  be  grraduaiiy 

,  •11111.^1         changed  and  written 

vestments  were  made  or  trzmsactions  had,  shall  not  be  ctr  to  conform  to 

Act    ctCt 

affected  by  the  provisions  of  this  act,  except  that  any 
such  investments  made  prior  to  July  1,  1909,  when  not 
complying  with  the  provisions  hereof,  shall  be  changed 
to  conform  hereto;  but  such  change  shall  be  made  grad- 
ually and  in  such  manner  as  to  prevent  loss  or  embar- 
rassment in  the  business  of  such  bank,  or  unnecessary 
loss  or  injury  to  the  borrowers  on  such  security;  pro- 
vided, that  the  legality  of  any  investments  heretofore 
lawfully  made,  pursuant  to  the  provisions  of  this  act  as 
it  existed  on  zmd  subsequent  to  July  1,  1909,  shall  not  be 
affected  by  the  provisions  of  this  section. 

Section  1  46.     All  acts,  or  parts  of  acts,  in  conflict  with 
this  act  are  hereby  repealed. 

Ill        1  rr  Tir  ir\r»r«      '^'^  conflicting  acts. 

Section  147.     This  act  shall  take  effect  July  first,   1909.  etc.,  repealed. 


[161] 


Statutes  of  1909: 

Chapter     76,  Approved  March  I .  In  effect  July  1 ,   1  909. 

Amended   by  Statutes   of    1911: 

Chapter      1  1 ,  Approved  Feb.  6.  In  effect  Feb.       6,  1911. 

Chapter  488,  Approved  Apr.  21.  In  effect  June    20,  1911. 

Chapter  494,  Approved  Apr.  21.  In  effect  June    20,  1911. 

Chapter  495,  Approved  Apr.  21.  In  effect  June    20,  1911. 

Amended  by  Statutes  of  1911    (Special  Session): 

Chapter  2,  Approved  Dec.  18.  In  effect  Feb.  16,1912. 
Chapter     24,  Approved  Dec.    24.       In  effect  Feb.    22,1912. 

Amended  by   Statutes   of    1913: 

Chapter  104,  Approved  May  6.  In  effect  Aug.  10,1913. 
Chapter  192,  Approved  May    31.       In  effect  Aug.    10,1913. 

Amended  by   Statutes   of    1915:  < 

Chapter  140,  Approved  Apr.  28.  In  effect  Aug.  7,1915. 

Chapter  608,  Approved  June  3.  In  effect  Aug.  7,1915. 

Chapter  6  1  1,  Approved  June  3.  In  effect  Aug.  7,   1915. 

Chapter  612,  Approved  June  3.  In  effect  Aug.  7,1915. 

Amended   by  Statutes   of    1917: 

Chapter  500,  Approved  May  17.  In  effect  July  27.1917. 
Chapter  501,  Approved  May  17.  In  effect  July  27,1917. 
Chapter  504,  Approved  May     17.        In  effect  July     27,1917. 

Amended  by   Statutes   of    1919: 

Chapter  140,  Approved  May  3.  In  effect  July  22,1919. 
Chapter  33  7,  Approved  May     15.       In  effect  July    22,1919. 


[163] 


INDEX  TO  APPENDIX 


Extracts  from  Section  290a  of  the  Civil  Code. 

Elxtracts  from  Section  290a  of  the  Civil  Code,  relating 

(a)  Affidavit  mentioned  in  Sec.   8  of  Bank  Act; 

(b)  Approval  of  Superintendent  of  Banks  to  certificate  of 
incorporation  of  banking  company,  referred  to  in  Sec. 
127   of  the  Bank  Act. 

Section  1273  of  the  Code  of  Civil  Procedure. 

Section  1273  of  the  Code  of  Civil  Procedure,  referred  to  in  Sec. 
I  5  of  the  Bank  Act relating  to  procedure  by  which  un- 
claimed deposits  escheat  to  the  State. 

Section  1454  of  the  Code  of  Civil  Procedure 
Section  1454  of  the  Code  of  Civil  Procedure,  granting  to  certain 
surviving  heirs  of  a  deceased  depositor  the  privilege  of  with- 
drawing a  sum  not  greater  than  $1,000  if  that  sum  is  ag- 
gregate of  all  decedent's  deposits said  section  being  re- 
ferred to  in  the  note  to  Sec.    16  repealed    1919. 

Section   1278  of  the  Code  of  Civil  Procedure. 

Section    12  78    of   the   Code   of   Civil   Procedure,    relating   to   change 

of  name  of  a   banking   corporation, referred   to   in  Sec.    127 

of  the  Bank  Act. 

Portions  of  the  "Public  Utilities  Act." 

Extracts  from  Section  2  of  Public  Utilities  Act  of  California,  as 
amended  1919,  containing  definitions  referred  to  in  Section 
61  of  the  Bank  Act  (under  paragraphs  (f)  (3)  IV,  (g)  and 
(k)    of  subdivision  3   of  said  Section  61). 

Extracts  fronni  Chapter  VIII  of  Title  II  of  Part  IV  of  Division  First 
of  the   Civil   Code. 

Extracts  from  Chapter  VllI  of  Title  11  of  Part  IV  of  Division  First 
of  the  Civil  Code,  referred  to  in  Sections  61,  96  and  99  of 
the  Bank  Act,  relating  to  mortgage  insurance  and  mortgage- 
participation   certificates. 

Penal  Code  Sections  561,  561a,  561h,  561c,  561d  and  563a 
and  563b. 
Penal   Code  Sections   561,    561a,    561b,    561c,    56Id   and    563a   and 
563b,   relating  to   frauds  in  the  management  of  banks. 

General  Lav/s,  Chapter  496,  Statutes  1917. 
General  Laws,  Chapter  496,  Statutes    1917,  relating  to  the  liquida- 
tion of  banks, referred  to  in  note  to  Sec.    136  of  Bank  Act. 

"Bulletin  No.  1,"  referred  to  in  note  to  Section  5,  stating  regula- 
tions <;overning  banks  desiring  to  establish  insurance  agency, 
as  provided  in  Section  5   of  the  Bank  Act. 

Letter  from  State  Banking  Department  referred  to  in  note  to  Sec- 
tion 48a  stating  requirements  imposed  on  Banks  desiring  to 
assume  trust-company  functions  under  Section  48a  of  Bank 
Act. 

1165] 


§  290a  BLYTH,  WITTER  &   CO. 


APPENDIX 


Extracts  from  Section  290a  of  the  Civil  Code. 

Extracts  from  Section  290a  of  the  Civil  Code,   relating  to 

(a)  Affidavit  mentioned  in  Sec.  8  of  Bank  Act; 

(b)  Approval  of  Superintendent  of  Banks  to  certificate  of 
incorporation  of  banking  company,  referred  to  in  Sec. 
127  of  the  Bank  Act. 

Before  corporation       Section  290a.      Before  any  corporation,   authorized  in 

authorized  to  con-  _  i  i  l  •  r 

duct  business  as  its  articles   of   incorporation   to   conduct   the   business   or 

executor,  trustee,  ■,       .     .  ■•.  r 

etc.,  or  engage  in  acting   as    executor,    administrator,    guardian    or    estates, 

business  of  banking,  _  .  ,  .  i  . 

etc.,  may  file  with  assignee,   receiver,   depositary,   or  trustee  under  appoint- 

Secy.  of  State  copy  i         •  r  i  c     i   • 

of  articles  of  incor-  rncnt  of  any  court  or  by  authority  or  any  law  or  this  state, 

poration,   etc,   cer-  •111 

tificate  of  approval  or  as  trustee  for  any  purpose  permitted  by  law,  or  to  en- 

of  Supt.  to  be  .11.  r  1  1   •  r  •     •  iL 

attached,  gage  in  the  business  or  banking,  or  or  receiving  the  money 
of  others  on  deposit,  may  file  with  the  secretary  of  state 
a  certified  copy  of  its  articles  of  incorporation,  or  of  a 
certificate  of  extension  of  its  term  of  existence,  or  of  a 
certificate  increasing  or  decreasing  the  number  of  its 
directors,  or  of  a  certificate  increasing  or  decreasing  its 
capital  stock,  or  of  its  amended  articles  of  incorporation, 
or  of  its  articles  of  incorporation  and  consolidation,  there 
must  be  attached  thereto  the  certificate  of  approval  of 
the  superintendent  of  banks;  provided,  that  this  section 
This  section  not  ap-  shall  not  apply  to  any  corporation  authorized  to  engage 

plicable  to  corpora-    .         %        ^         .  r  •     •  iliT 

tion  authorized  to  in  the  business  ot  receiving  and  holding  in  escrow  money 

engage  in  business  .  .,  ,.  .  .  lit 

of  holding  escrows,  or   its   equivalent,    pending   investment   m   real    estate   or 

or  acting  as  trustee  .   .  f  .f-m^'-l  t  j. 

under  deeds  of  trust  securities  tor  or  on  account  or  its  principal,   or  to  act  as 

or  repaymen^^o^   trustee  Under  deeds  of  trust  given  solely  for  the  purpose 

of  securing  obligations  for  the  repayment  of  money  other 

than  corporation  bonds,   nor  shall  such  corporations  be 

subject  to  the  supervision  of  the  superintendent  of  banks. 

[1661 


APPENDIX  §  1273 

Section  1273  of  the  Code  of  Civil  Procedure. 

Section  1273  of  the  Code  of  Civil  Procedure,  referred  to  in  Sec. 
1 5  of  the  Bank  Act relating  to  procedure  by  which  un- 
claimed  deposits   escheat   to   the   State. 

1273.     All  amounts  of  money  heretofore  or  hereafter  Bank  deposits  not 

■.  .,.,  •,,  ,  i-ri  •  L        drawn  on  or  claimed 

deposited  with  any  bank  to  the  credit  or  depositors  who  for  more  than  20 
have  not  made  a  deposit  on  said  account  or  withdrawn  dence  of  depositor 

1  I-  !•  11*11111_  "^  claimant  not 

any  part  thereor  or  the  interest  and  which  shall  have  re-  gied  with  bank, 

di     .  I     /■  iL  i  1.  Cu         1.1.       escheat  to  State. 

unclaimed  for  more  than  twenty  years  arter  the 

date  of  such  deposit,  or  withdrawal  of  any  part  of  prin- 
cipal or  interest,  and  where  neither  the  depositor  or  any 
claimant  has  filed  any  notice  with  such  bank  showing  his 
or  her  present  residence,  shall,  with  the  increase  and 
proceeds   thereof,    escheat   to   the   state.      Whenever   the  Attorney  General  to 

.     r  1         f  1        1  •  I         commence  action 

attorney  general  shall  be  informed  of  such  deposits,   he  against  depositary 

.         bank  and  depositors 

shall  commence  an  action  or  actions  in  the  name  of  the  to  obtain  judgment 

J  r   '^^  escheat  to 

State  of  California,  in  the  superior  court  for  the  county  of  state. 
Sacramento,  in  which  shall  be  joined  as  parties  the  bank 
or  banks  in  which  the  moneys  are  deposited  and  the 
names  of  all  such  depositors.  All  or  any  number  of  de- 
positors or  banks  may  be  included  in  one  action.  Service 
of  process  in  such  action  or  actions  shall  be  made  by  de- 
livery of  a  copy  of  the  complaint  and  summons  to  the 
president,  cashier  or  managing  officer  of  each  defendant 
bank,  and  by  publication  of  a  copy  of  such  summons  in 
a  newspaper  of  general  circulation  published  in  said 
county  for  a  period  of  four  weeks.  Upon  the  trial  the 
court  must  hear  all  parties  who  have  appeared  therein 
and  if  it  be  determined  that  the  moneys  deposited  in  any 
defendant  bank  or  banks  are  unclaimed  as  hereinabove 
stated,  then  the  court  must  render  judgment  in  favor  of 
the  state  declaring  that  said  moneys  have  escheated  to 
the  state  and  commanding  said  bank  or  banks  to  forth- 
with deposit  all  such  moneys  with  the  state  treasurer,  to 
be  received,  invested,  accounted  for  and  paid  out  in  the 
same  manner  and  by  the  same  officers  as  is  provided  in 
the  case  of  other  escheated  property. 

[167] 


§1454  BLYTH.  WITTER  &  CO. 

Section  1454  of  the  Code  of  Civil  Procedure 

Section  1454  of  the  Code  of  Civil  Procedure,  granting  to  certain 
surviving  heirs  of  a  deceased  depositor  the  privilege  of  v^ith- 
drawing  a  sum  not  greater  than  $1,000  if  that  sum  is  ag- 
gregate of  all  decedent's  deposits said  section  being  re- 
ferred to  in  the  note  to  Sec.    16   repealed    1919. 

Certain  surviving       The  Surviving  husband  or  wife  or  the  guardian  of  the 

lie'.rs  of  deceased  °  ^ 

depositor  may, with-  estate  of  any  insane  or  incompetent  husband  or  wife,  of 

out  administration, 

collect  of  bank,  de-  any  deceased  person,   or  if  no  husband  or  wife  is  Hving, 

posits  of  dscedent 

not  exceeding  $1000,  then  the  children,  or  the  guardian  of  tne  estates  of  any 
minor  or  insane  or  incompetent  children  of  said  deceased, 
or,  if  no  children  are  living,  then  the  father  or  mother  or 
guardian  of  the  estate  of  any  insane  or  incompetent 
father  or  mother  of  such  decedent,  and  if  neither  the 
father  nor  mother  is  living,  then  the  brothers  and  sisters 
or  the  guardian  of  the  estates  of  any  minor  or  insane  or 
incompetent  brothers  and  sisters  of  such  decedent,  may, 
without  procuring  letters  of  administration,  collect  of  any 
bank  any  sum  which  said  deceased  may  have  left  on  de- 
posit in  such  bank  at  the  time  of  his  or  her  death;  pro- 
vided, such  deposits  shall  not  exceed  the  sum  of  one 
thousand  dollars. 

Bank  upon  receiving        Any  bank,  upon  receiving  an  affidavit  stating  that  said 

affidavit  stating  .  .         ,  ,  ,       ,  ^  .         ,  .     .  , 

certain  specified  depositor  IS  dead,   and   that  amant  is  the  surviving  hus- 

facts,  may  pay  such  .  ,  ..  ,  i-  r      i  r  • 

deposits,  band  or  wire  or  the  guardian  or  the  estate  or  an  insane 
or  incompetent  surviving  husband  or  v/ife,  as  the  case 
may  be,  of  said  decedent,  or  stating  that  decedent  left 
no  husband  or  wife,  and  that  affiant  is  the  child,  or  that 
affiants  are  the  children,  or  the  guardians  of  the  estates 
of  the  minor,  insane  or  incompetent  children,  as  the  case 
may  be,  of  said  decedent,  or  stating  that  decedent  left 
neither  husband,  wife  nor  children,  and  that  affiant  is  the 
father  or  mother,  or  the  guardian  of  the  estate  of  the  in- 
sane or  incompetent  father  or  mother,  as  the  case  may  be, 
of  said  decedent,  or  stating  that  the  decedent  left  neither 
husband,  wife,  children,  father  nor  mother,  and  that 
affiants  are  the  brothers  and  sisters,  or  the  guardians  of 
the  estates  of  the  minor,  insane  or  incompetent  brothers 

[168] 


APPENDIX  §  1454 

and  sisters,  as  the  case  may  be,  of  said  decedent,  and  that  T^fie  amount  left 

by  decedent  in  any 

the  whole  amount  that  said  decedent  left  on  deposit  in  »°<i  ^^^  ^'^"•^^  °^   , 

state  not  to  exceed 

any  and  all  banks  of  deposit  in  this  state,  does  not  exceed  $1000. 
the  sum  of  one  thousand  dollars,  may  pay  to  said  affiant 
or  affiants  any  deposit  of  said  decedent,  if  the  same  does 
not  exceed  the  sum  of  one  thousand  dollars,  and  the  re- 
ceipt of  such  affiant  or  affiants  is  sufficient  acquittance 
therefor. 


1691 


§  1278 BLYTH,  WITTER  &   CO. 

Sec.  1278,  Code  of  Civil  Procedure 

Section  1278  of  the  Code  of  Civil  Procedure,  relating  to  change 
of  name  of  a  banking  corporation,  referred  to  in  Sec.  127 
of   the   Bank   Act. 

Said  Section  1278  appears  in  Title  IX  of  Part  III  of  the  Code  of 
Civil  Procedure.  This  Title  embraces  Sections  1275-1279  of  said 
Code,  and  covers  the  subject,    "Of  Change  of  Names." 

Said  Title  IX,  after  providing  that  applications  for  change  of 
name  must  be  heard  and  determined  in  the  Superior  Court,  and 
prescribing  various  steps  to  be  taken  in  the  institution  and  prose- 
cution of  an  application  of  this  kind,  goes  on  in  Section  1278  to 
provide  as  follov^fs: 

Proceedings  at  hear-       Section  12  78.     Such  application  must  be  heard  at  such 

ing  in  court  on  ^ '^ 

application  for  time  as  the  court  may  appoint,   and   objections  may  be 

change  of  name  of  ./        r- 1-  >  j  j 

corporation,  filed  by  any  person  who  can,  in  such  objections,  show  to 
the  court  good  reason  against  such  change  of  name.  On 
the  hearing,  the  court  may  examine  on  oath  any  of  the 
petitioners,  remonstrants,  or  other  persons,  touching  the 
appHcation,  and  may  make  an  order  changing  the  name, 
or  dismissing  the  appHcation,  as  to  the  court  may  seem 
right  and  proper;  provided,  that  if  the  appHcant  for  a 
change  of  name  be  a  corporation,  such  appHcant  shall 
file  in  court  at  the  time  of  hearing  the  application,  the 
certificate  of  the  secretary  of  state  that  the  name  desired 
to  be  used  by  the  applicant,  is  not  the  corporate  name 
of  any  corporation  existing  at  said  time,  and  that  said 
name  does  not  so  closely  resemble  the  name  of  any  such 
Banking  corporation  existing   corporation   as   will   tend   to   deceive;    provided, 

must  file  in  court   ^|  i-fi  T  c  i  r  i 

certificate  of  Supt.  rurther,   that  ir  the  applicant  for  a  change  or  name  be  a 

to  effect  that  name  ii.  .  i  i.  inn- 

desired  to  he  used  bankmg  Corporation,  such  applicant  shall  hie  m  court  at 

not  closely  similar     i.  f.  .  ,  |..  i  .  (•  r      ■, 

to  name  of  existing  the  time  OF  hearing  the  application,  the  certihcate  or  the 
superintendent  of  banks  that  the  name  desired  to  be  used 
by  the  applicant  does  not  resemble  so  closely  as  to  be 
likely  to  cause  confusion,  the  name  of  any  other  bank 
previously  formed  under  the  law^s  of  this  state. 


170] 


APPENDIX  Public  Utilities  Act 

PUBLIC  UTILITIES  ACT. 

Extracts  from  Section  2  of  Public  Utilities  Act  of  California,  as 
amended  1919,  containing  definitions  referred  to  in  Section 
61  of  the  Bank  Act  (under  paragraphs  (f)  (3)  IV,  (g)  and 
(k)   of  subdivision  3   of  said  Section  61). 

(g)    The    term    "street    railroad,"    vv^hen    used    in    this  Definitions,  in  Public 

,      ,  .,  Ill  11  irtiUties  Act,  of  the 

act,  includes  every  railway,  and  each  and  every  branch  or  terms:  "Street 

I  /.     I  I  11-  Railroad." 

extension  thereor,  by  whatsoever  power  operated,  being 
mainly  upon,  along,  above  or  below  any  street,  avenue, 
road,  highway,  bridge  or  public  place  within  any  city 
and  county  or  city  or  town,  together  with  all  real  estate, 
fixtures  and  personal  property  of  every  kind  used  in  con- 
nection therewith,  owned,  controlled,  operated  or  man- 
aged for  public  use  in  the  transportation  of  persons  or 
property;  but  the  term  "street  railroad,"  when  used  in 
this  act,  shall  not  include  a  railway  constituting  or  used 
as  a  part  of  a  commercial  or  interurban  railway. 

(h)    The    term    "street    railroad    corporation,"    when  "Street  railroad 

corporation." 

used  in  this  act,  includes  every  corporation  or  person, 
their  lessees,  trustees,  receivers  or  trustees  appointed  by 
any  court  whatsoever,  owning,  controlling,  operating  or 
managing  any  street  railroad  for  compensation  within 
this  State. 

(i)  The  term  "railroad,"  when  used  in  this  act,  in-  "Railroad." 
eludes  every  commercial,  interurban  and  other  railway 
other  than  a  street  railroad,  and  each  and  every  branch 
or  extension  thereof,  by  whatsoever  power  operated, 
together  with  all  tracks,  bridges,  trestles,  rights  of  way, 
subways,  tunnels,  stations,  depots,  union  depots,  ferries, 
yards,  grounds,  terminals,  terminal  facilities,  structures 
and  equipment,  and  all  other  real  estate,  fixtures  and 
personal  property  of  every  kind  used  in  connection  there- 
with, owned,  controlled,  operated  or  managed  for  pub- 
lic use  in  the  transportation  of  persons  or  property. 

(j)  The  term  "railroad  corporation,"  when  used  in 
this  act,  includes  every  corporation  or  person,  their 
lessees,   trustees,   receivers   or  trustees  appointed  by  any 

[1711 


"Railroad 
corporation." 


Public  Utilities  Act 


BLYTH.  WITTER  &   CO. 


"Express 
corporation." 


'Common  carrier. 


"Pipe  line. 


'Pipe  line  corpora- 
tion." 


court  whatsoever,  owning,  controlling,  operating  or  man- 
aging any  railroad  for  compensation  within  this  State. 

(k)  The  term  "express  corporation,"  when  used  in 
this  act,  includes  every  corporation  or  person,  their 
lessees,  trustees,  receivers  or  trustees  appointed  by  any 
court  w^hatsoever,  engaged  in  or  transacting  the  business 
of  transporting  any  freight,  merchandise  or  other  prop- 
erty for  compensation  on  the  line  of  any  common  carrier 
or  stage  or  auto  stage  line  within  this  State. 

(1)  The  term  "common  carrier,"  when  used  in  this 
act,  includes  every  railroad  corporation;  street  railroad 
corporation;  express  corporation;  dispatch,  sleeping  car, 
dining  car,  drawing  room  car,  freight,  freight  line,  re- 
frigerator, oil,  stock,  fruit,  car  loaning,  car  renting,  car 
loading  and  every  other  car  corporation  or  person,  their 
lessees,  trustees,  receivers  or  trustees  appointed  by  any 
court  w^hatsoever,  operating  for  compensation  within 
this  State;  and  every  corporation  or  person,  their  lessees, 
trustees,  receivers  or  trustees  appointed  by  any  court 
whatsoever,  owning,  controlling,  operating  or  managing 
any  vessel  engaged  in  the  transportation  of  persons  or 
property  for  compensation  between  points  upon  the  in- 
land waters  of  this  State  or  regularly  engaged  in  the 
transportation  of  persons  or  property  for  compensation 
upon  the  high  seas,  on  regular  routes  between  points 
v/ithin  this  State.  The  term  "inland  waters"  as  used  in 
this  subsection  includes  all  navigable  waters  within  the 
State  of  California  other  than  the  high  seas. 

(m)  The  term  "pipe  line,"  w^hen  used  in  this  act,  in- 
cludes all  real  estate,  fixtures  and  personal  property, 
owned,  controlled,  operated  or  managed  in  connection 
with  or  to  facilitate  the  transmission,  storage,  distribution 
or  delivery  of  crude  oil  or  other  fluid  substances  except 
water  through  pipe  lines. 

(n)  The  term  "pipe  line  corporation,"  v/hen  used  in 
this  act,   includes  every  corporation  or  person,   their  les- 


[172; 


APPENDIX Public  Utilities  Act 

sees,  trustees,  receivers  or  trustees  appointed  by  any 
court  whatsoever,  owning,  controlling,  operating  or  man- 
aging any  pipe  line  for  compensation  within  this  State. 

(o)  The  term  "gas  plant,"  when  used  in  this  act,  "Gas  plant." 
includes  all  real  estate,  fixtures  and  personal  property, 
owned,  controlled,  operated  or  managed  in  connection 
with  or  to  facilitate  the  production,  generation,  trans- 
mission, delivery  or  furnishing  of  gas  (natural  or  manu- 
factured) for  light,  heat  or  power. 

(p)  The  term  "gas  corporation,"  when  used  in  this  "Gas  corporation." 
act,  includes  every  corporation  or  person,  their  lessees, 
trustees,  receivers  or  trustees  appointed  by  any  court 
whatsoever,  owning,  controlling,  operating  or  managing 
any  gas  plant  for  compensation  within  this  State,  except 
where  gas  is  made  or  produced  on  and  distributed  by 
the  maker  or  producer  through  private  property  alone 
solely  for  his  ow^n  use  or  the  use  of  his  tenants  and  not 
for  sale  to  others. 

(q)  The  term  "electric  plant,"  when  used  in  this  act,  "Electric  plant" 
includes  all  real  estate,  fixtures  and  personal  property 
owned,  controlled,  operated  or  managed  in  connection 
with  or  to  facilitate  the  production,  generation,  trans- 
mission, delivery  or  furnishing  of  electricity  for  light, 
heat  or  power,  and  all  conduits,  ducts  or  other  devices, 
materials,  apparatus  or  property  for  containing,  holding 
or  carrying  conductors  used  or  to  be  used  for  the  trans- 
mission of  electricity  for  light,  heat  or  power. 

(r)    The  term   "electrical  corporation,"  when  used  in  "Electrical  cor- 
poration. 

this  act,  includes  every  corporation  or  person,  their  les- 
sees, trustees,  receivers  or  trustees  appointed  by  any 
court  whatsoever,  owning,  controlling,  operating  or  man- 
aging any  electric  plant  for  compensation  within  this 
State,  except  where  electricity  is  generated  on  or  dis- 
tributed by  the  producer  through  private  property  alone 
solely  for  his  own  use  or  the  use  of  his  tenants  and  not 
for  sale  to  others. 

[173] 


Public  Utilities  Act  BLYTH.  WITTER  &   CO. 

"Telephone  line."  (^g)  The  term  "telephone  Hne,"  when  used  in  this  act, 
includes  all  conduits,  ducts,  poles,  wires,  cables,  instru- 
ments and  appliances,  and  all  other  real  estate,  fixtures 
and  personal  property  owned,  controlled,  operated  or 
managed  in  connection  with  or  to  facilitate  communica- 
tion by  telephone,  whether  such  communication  is  had 
with  or  without  the  use  of  transmission  wires. 

"Telephone  corpora-        (t)    The  term  "telephone  corporation,"  when  used  in 

tion," 

this  act,  includes  every  corporation  or  person,  their  les- 
sees, trustees,  receivers  or  trustees  appointed  by  any 
court  whatsoever,  owning,  controlling,  operating  or 
managing  any  telephone  line  for  compensation  within 
this  State. 
"Teie^aph  line."  (y)  yj^g  term  "telegraph  line,"  when  used  in  this 
act,  includes  all  conduits,  ducts,  poles,  wires,  cables,  in- 
struments and  appliances,  and  all  other  real  estate,  fix- 
tures and  personal  property  owned,  controlled,  operat- 
ed or  managed  in  connection  with  or  to  facilitate  com- 
munication by  telegraph,  whether  such  communication 
is  had  with  or  without  the  use  of  transmission  wires. 
"Telegraph  corpora-  (y)  fj^e  term  "telegraph  corporation,"  when  used  in 
this  act,  includes  every  corporation  or  person,  their  les- 
sees, trustees,  receivers  or  trustees  appointed  by  any 
court  whatsoever,  ow^ning,  controlling,  operating  or  man- 
aging any  telegraph  line  for  compensation  within  this 
State. 

""Water  system,  "  (w)  The  term  "w^ater  system,"  when  used  in  this  act, 
includes  all  reservoirs,  tunnels,  shafts,  dams,  dikes,  head- 
gates,  pipes,  flumes,  canals,  structures  and  appliances, 
and  all  other  real  estate,  fixtures  and  personal  property, 
owned,  controlled,  operated  or  managed  in  connection 
with  or  to  facilitate  the  diversion,  development,  storage, 
supply,  distribution,  sale,  furnishing,  carriage,  apportion- 
ment or  measurement  of  water  for  power,  irrigation, 
reclamation  or  manufacturing,  or  for  municipal,  domestic 
or  other  beneficial  use. 

[174] 


APPENDIX 


Public  Utilities  Act 


(x)    The  term  "water  corporation,"  when  used  in  this  "Water  corpora- 
act,   includes  every  corporation  or  person,    their  lessees, 
trustees,    receivers   or   trustees   appointed    by   any     court 
whatsoever,    owning,   controlling,   operating  or  managing 
any  water  system  for  compensation  within  this  State. 

(y)  The  term  "vessel,"  when  used  in  this  act,  includes  "Vessel." 
every  species  of  water  craft,  by  whatsoever  power  oper- 
ated, which  is  owned,  controlled,  operated  or  managed 
for  public  use  in  the  transportation  of  persons  or  prop- 
erty, except  rowboats,  sailing  boats  and  barges  under 
twenty  tons  dead  w^eight  carrying  capacity,  and  vessels 
propelled  by  steam,  gas,  fluid  naphtha,  electricity,  or 
other  motive  pov/er  under  the  burden  of  five  tons  net 
register. 

(z)  The  term  "wharfinger,"  when  used  in  this  act,  "wharfinger." 
includes  every  corporation  or  person,  their  lessees,  trus- 
tees, receivers  or  trustees,  appointed  by  any  court  w^hat- 
soever,  owning,  controlling,  operating  or  managing  any 
dock,  wharf  or  structure  used  by  vessels  in  connection 
with  or  to  facilitate  the  receipt  or  discharge  of  freight 
or  passengers  for  compensation  within  this  State. 

(aa)  The  term  "warehouseman,"  when  used  in  this  "Warehouseman. 
act,  includes  every  corporation  or  persons,  their  lessees, 
trustees,  receivers  or  trustees  appointed  by  any  court 
whatsoever,  owning,  controlling,  operating  or  managing 
any  building  or  structure  in  which  property  is  regularly 
stored  for  compensation  within  this  State,  in  connection 
with  or  to  facilitate  the  transportation  of  property  by  a 
common  carrier  or  vessel,  or  the  loading  or  unloading 
of  the  same,  other  than  a  dock,  wharf  or  structure,  owned, 
operated,  controlled  or  managed  by  a  wharfinger. 


(dd)    The  term  "public  utility,"  when  used  in  this  act,  "Public  utility." 
includes    every    common    carrier,    pipe    line    corporation, 
gas    corporation,    electrical    corporation,    telephone    cor- 

[175] 


Public  Utilities  Act  BLYTH,  WITTER  &   CO. 

'Tubiicutiirty'^-pQj-gjjQj^  jgjggj.^p}^  Corporation,  water  corporation, 
wharfinger,  warehouseman  and  heat  corporation,  v/here 
the  service  is  performed  for  or  the  commodity  delivered 
to  the  public  or  any  portion  thereof.  The  term  "public 
or  any  portion  thereof,"  as  herein  used  means  the  public 
generally,  or  any  limited  portion  of  the  public  including 
a  person,  private  corporation,  municipality  or  other 
political  subdivision  of  the  State,  for  which  the  service 
is  performed  or  to  which  the  commodity  is  delivered,  and 
whenever  any  common  carrier,  pipe  line  corporation, 
gas  corporation,  electrical  corporation,  telephone  corpor- 
ation, telegraph  corporation,  water  corporation,  wharf- 
inger, warehouseman  or  heat  corporation  performs  a 
service  or  delivers  a  commodity  to  the  public  or  any  por- 
tion thereof  for  which  any  compensation  or  payment 
whatsoever  is  received,  such  common  carrier,  pipe  line 
corporation,  gas  corporation,  electrical  corporation, 
telephone  corporation,  telegraph  corporation,  water 
corporation,  wharfinger,  warehouseman  or  heat  corpora- 
tion is  hereby  declared  to  be  a  public  utility  subject  to  the 
jurisdiction,  control  and  regulation  of  the  commission  and 
the  provisions  of  this  act.  Furthermore,  when  any  per- 
son or  corporation  performs  any  service  or  delivers  any 
commodity  to  any  person  or  persons,  private  corpora- 
tion or  corporations,  municipality  or  other  political  sub- 
division of  the  State,  which  in  turn  either  directly  or  in- 
directly, mediately  or  immediately,  perform  such  service 
or  deliver  such  commodity  to  or  for  the  public  or  some 
portion  thereof,  such  person  or  persons,  private  corpora- 
tion or  corporations  and  each  thereof  is  hereby  declared 
to  be  a  public  utility  and  to  be  subject  to  the  jurisdiction, 
control  and  regulation  of  the  commission  and  to  the 
provisions  of  this  act. 


[176] 


ance. 


APPENDIX  Mortgage  Insurance 

MORTGAGE  INSURANCE. 

Extracts  from  Chapter  VIII  of  Title  II  of  Part  IV  of  "Mortgage  insur- 
Division  First  of  the  Civil  Code  of  California  as  revised 
and  amended;  Approved  June  12,    1915. 

Referred  to  in  paragraph  (k)  of  Subdivision  3  of  Sec- 
tion 61,  also  in  Subdivision  (d)  of  Sec.  96,  and  in  Sec. 
99  of  the  Bank  Act. 

CHAPTER  VIII. 

MORTGAGE  INSURANCE. 

Sec.    453aa.    Mortgage  insurance  companies  subject  to  insurance 
laws    and    the    authority    of    insurance    commis- 


sioner. 


453bb.  Mortgage  insurance  company  defined.  The  term 
"security"  as  used  in  this  chapter  defined.  Policy 
of  mortgage  insurance  defined.  Mortgage  par- 
ticipation certificate  defined.  Entire  mortgage 
guaranty   defined. 

453cc.  Requisite  capital  stock  of  mortgage  insurance  com- 
pany; certificate  of  authority  required.  Kind 
and  amount  of  securities  that  may  be  guaran- 
teed. Policies  of  mortgage  insurance  do  not 
constitute  "debts"  or  "indebtedness"  of  issuing 
com.pany.  Can  not  invest  in,  hold  or  own  capi- 
tal stock  of  another  corporation,  except  as  pro- 
vided herein. 

453dd.  Must  accumulate  a  surplus.  Restriction  on  making 
of   dividends. 

453ee.     Investments  permitted. 

453ff.  Mortgage  participation  certificates  and  guaranteed 
securities  made  legal  investments  for  trust 
funds,    insurance    companies    and    others. 

453gg.    Quarterly   reports  to  insurance  commissioner. 

453aa.    Every  mortgraffe   insurance   company  shall  be  Mortgage  insurance 

•^  .  .   companies  subject 

subiect  to  and  shall  comply  w^ith  all  the  requirements  of  to  innnance  laws 

•*  111-  "'"^  authority  of 

the  laws  of  this  state  made  applicable  to  msurance  com-  insurance  oommis- 

1       •  £     L        •         sioner. 

panies  generally  and  the  rules  and  regulations  ot  the  m- 
surance  department  of  this  state,  excepting  in  so  far  as 
said  laws,  rules  or  regulations  may  be  inconsistent  with 
the  other  provisions  in  this  chapter  contained;  and  the 
insurance  commissioner  shall  have  the  same  power  and 
authority   over  such   company   that   he   may   exercise   in 

[177] 


Mortgage  Insurance BLYTH,    WITTER   &    CO. 

relation  to  other  insurance  companies,  including  the  right 
to  examine  and  inspect  the  financial  condition  and  affairs 
of  such  company  relating  to  the  business  of  such  com- 
pany, and  to  compel  compliance  with  the  provisions  of 
law  governing  any  such  company. 

Definitions:  "Mort-       453bb.    The  term  "mortgage  insurance  Company"  shall 

gage  insurance  _       _  ,  ~ 

company."  include  every  association,  corporation,  firm  or  person 
v/ho  shall  engage  as  a  business  in  making  and  issuing 
policies  of  mortgage  insurance. 

"Security."  The  term  "security"  wherever  used  in  this  chapter, 
w^ithout  a  different  meaning  being  specified  or  made  ap- 
parent, shall  be  construed  to  refer  to  and  include  within 
its  meaning  a  note  or  notes,  or  bond  or  bonds,  together 
with  the  mortgage  or  deed  of  trust  securing  the  same 
which  evidence  a  debt  secured  by  a  first  lien  on  a  market- 
able title  in  fee  to  real  estate,  or  to  real  estate  with  im- 
provements thereon. 


"Policy  of  mort- 
gage insurance." 


Any  contract  made  and  issued  by  a  mortgage  insurance 
company  which  purports  to  guarantee  or  insure  against 
loss  on,  or  to  guarantee  the  payment  of,  w^ithin  a  specified 
time,  the  whole,  or  any  part,  of  the  principal,  interest  or 
other  sums  agreed  to  be  paid  under  the  terms  of  any 
security,  or  other  sums  secured  under  the  terms  of  any 
security,  shall  be  deemed,  and  is  hereby  designated,  a 
"policy  of  mortgage  insurance." 

'^^°tion^cer^tificate^'  ^  poHcy  of  mortgage  insurance  which  evidences  the 
ownership  by  the  insured  of  an  undivided  or  other  par- 
tial share  or  interest,  or  the  right  to  participate  to  a  speci- 
fied extent,  in  a  security,  or  in  a  group  consisting  of  sev- 
eral securities,  and  purports  to  guarantee  the  payment  of 
such  securities,  or  the  payment  of  such  undivided  or 
other  partial  share  or  interest  therein,  or  the  amount  of 
such  participation,  may  be  referred  to  as,  and  is  hereby 
designated,  a  "mortgage  participation  certificate." 

"  "^gu'arlntyf"        A  policy  of  mortgage  insurance,   other  than   a  mort- 

fI781 


APPENDIX  Mortgage  Insurance 

gage  participation  certificate,  which  covers  and  refers  to 
the  entire  indebtedness  evidenced  by  a  security,  may  be 
referred  to  as,  and  is  hereby  designated,  an  "entire  mort- 
gage guaranty." 


453ff.    Mortgage  participation  certificates,  also  securi-  Mortgage  participa- 

.  .  .  ^    tion  certificates,  and 

ties  guaranteed  by  policies  of  mortgage  insurance  issued  certificates  guaran- 

f  .  •11  ••  ri-l  1111         t^&A  by  policies  of 

in  conformity  with  the  provisions  or  this  chapter  shall  be  mortgage  insurance, 

,  ,.  ,  ,|  rillll  legal  investment 

legal  investments  for  all  trust  funds  held  by  any  executor,  for  trust  funds  and 

,       .     ,  , .  I  111-  funds  of  banks, 

administrator,  guardian,  trustee  or  other  person  holding  trust  companies, 
trust  funds,  also  for  the  funds  of  insurance  companies, 
banks,  banking  institutions  and  trust  companies,  and  shall 
be  accepted  by  the  State  of  California,  its  officers  and 
officials,  as  securities  comprising  any  part  of  any  fund  or 
deposit  required  by  law  to  be  made  with  the  State  of 
California,  or  any  officer  or  official  thereof,  by  any  trust 
company  or  insurance  company  doing  business  in  the 
State  of  California,  and  all  premiums  required  to  be  paid 
according  to  the  terms  of  any  such  mortgage  participation 
certificate,  or  other  policy  of  mortgage  insurance,  may 
be  charged  to  or  paid  out  of  the  income  from  the  note  or 
notes  or  bond  or  bonds  covered  thereby;  provided,  that  ^f"s?c'!'app^y°S°'^ 
the  foregoing  provisions  of  this  section,  in  so  far  as  they  *° '^^'^p^^/^uh''*^' 
refer  to  mortgage  participation  certificates,  shall  apply  ^^l^^^^  require- 
only  to  such  mortgage  participation  certificates  as  evi- 
dence the  ownership  of  shares  or  interests  in,  or  participa- 
tion in,  securities  which  shall  have  been  assigned  to  a 
trust  company  organized  and  doing  business  under  the 
laws  of  and  within  this  state  and  shall  be  held  by  such 
trust  company  for  the  common  and  equal  benefit  of  the 
holders  of  all  mortgage  participation  certificates  issued 
or  to  be  issued  evidencing  the  ownership  of  shares  or  in- 
terests in,  or  participation  in,  any  particular  security  or 
group  of  securities  so  assigned  and  such  trust,  and  the 
administration  thereof,  shall  at  all  times  be  and  hereby  is 
expressly  made  subject  to  the  inspection,  supervision  and 


179] 


Mortgage  Insurance  BLYTH,    WITTER   &    CO. 


control  of  the  superintendent  of  banks  as  fully  and  com- 
pletely as  if  the  same  constituted  a  court  trust  under  the 
Each  certificate  provisions   of   the   Bank   Act;   provided   also,    that   each 

must  have  there-  ,  ...  .(•  -i  i 

with  certificates  and  such    mortgage    participation    certincate    must    bear    the 

appraisement,  as  .  _  -  ,  i  iT       ^    il_     i.    «.!- 

specified,  certihcate  of  such  trust  company  to  the  ettect  that  the 
aggregate  amount  of  mortgage  participation  certificates 
then  outstanding,  including  both  the  one  being  certified 
and  all  others  based  on  the  same  security  or  group  of 
securities,  does  not  exceed  the  amount  of  the  unpaid 
principal  of  the  debt  or  debts  evidenced  by  such  particu- 
lar security  or  group  of  securities;  provided  also,  that 
each  security  so  assigned  shall  be  accompanied  by  a  copy 
of  the  appraisement  and  of  the  certificate  of  the  directors 
filed  or  to  be  filed  with  the  insurance  commissioner  as 
required  by  the  provisions  of  this  chapter;  provided  also. 
Copy  of  appraise-  that  a  copy  of  each  such  appraisement  and  accompany- 

ment,  certificate,  rii-  iiii  l 

etc.,  to  be  trans-  ing  Certificate  of  the   directors   shall   be   promptly,    upon 

mitted  to  Supt.  .  c  i  i  •  •  l  L 

the  assignment  or  each  such  security,  transmitted  to  the 
superintendent  of  banks,  and  that  each  such  copy  of  ap- 
praisement so  transmitted  shall  bear  an  endorsement  or 
certificate  executed  by  the  trust  company  to  which  each 
such  security  is  so  assigned  reciting  and  setting  forth  the 
amount  of  the  unpaid  principal  named  in  the  security 
which  covers  the  property  described  in  such  appraise- 
First-iien  require-  ment;  provided  also,  that  if  any  such  mortgage  participa- 

ments,  as  to  certifi-      .  ._  .   .  l     !_  !•    •  C 

cates  covered  by  this  tion   certihcates,    or  Securities   guaranteed    by   policies   or 

chapter,  if  used  as  .  .  ,    .  r  -^  "iL     iL 

part  of  fund  or  de-  mortgage  insurance  issued  m  conrormity  with  the  provi- 

posit  with  trust-com-      .  r     i   .         i  .  i  •  i.'  •    • 

pany,  with  State  sions  of  this  chapter,  are  used  as  securities  comprising  any 
Treasurer.  ^^^^  ^j;  ^^^^  {xin6.  OX  deposit  required  by  law  to  be  made 
with  the  state  treasurer  by  a  trust  company,  the  securities 
so  guaranteed  or  the  ownership  of,  or  participation  in, 
which  is  evidenced  by  such  participation  certificates  must 
constitute  a  first  lien  on  improved  and  productive  real  es- 
tate in  the  State  of  California,  such  improved  real  estate 
being  worth  at  least  double  the  amount  of  such  lien;  and 
also  that  the  real  estate  and  improvements  which  are  cov- 
ered by  the  lien  of  any  security  so  guaranteed  or  the  own- 

nsoi 


APPENDIX  Mortgage  Insurance 

ership  of,  or  participation  in,  which  is  evidenced  by  mort- 
gage participation  certificates  which  are  so  used  shall  be 
reappraised  at  least  once  every  two  years  and  in  the 
manner  in  this  chapter  provided  for  appraisements,  and 
a  copy  of  each  such  reappraisement  shall  be  filed  with 
the  trust  company  to  which  such  security  shall  have  been 
assigned  and  the  original  of  each  such  reappraisement 
bearing  the  endorsement  or  certificate  of  such  trust  com- 
pany as  to  the  amount  of  the  unpaid  principal  named  in 
such   security   shall   be   filed   with    the   superintendent   of  Legality  of  prior 

certificates  which 

banks;  provided,   further,   that  the  legality  or  validity  of  were  valid  when 

issued,  not  impaired 

entire  mortgage  guaranties  and  mortgage  participitation  by  this  chapter. 
certificates  heretofore  issued  which  fully  conform  to  and 
comply  with  the  law  in  force  at  date  of  issuance  shall  not 
be  affected  or  impaired  by  the  provisions  of  this  chapter 
and  such  entire  mortgage  guaranties  and  mortgage  par- 
ticipation certificates  shall  continue  to  be  legal  invest- 
ments and  recognized  for  all  purposes  to  the  extent  and 
in  the  manner  provided  by  the  law  in  force  at  date  of 
such  issuance. 


Substitution  in 
securities  on  which 


A  mortgage  insurance  company  which  issues  mort 
gage  participation  certificates  in  accordance  with  the  ^^t^tS-condu' 
provisions  of  this  section  may  at  any  time  and  from  time  *'°"^  governing. 
to  time  substitute  for  any  security  or  securities  comprising 
or  constituting  a  part  or  parts  of  a  group  of  securities,  the 
ownership  of,  or  participation  in,  which  is  evidenced  in 
whole  or  in  part  by  any  such  participation  certificates, 
other  securities  similarly  guaranteed  by  it  and  withdraw 
from  the  trust  company  the  security  or  securities  for 
which  such  substitution  shall  be  made;  provided,  how- 
ever, that  at  all  times  the  amount  of  the  unpaid  principal 
of  the  debts  evidenced  by  the  particular  group  of  securi- 
ties held  by  such  trust  company  and  affected  by  any  such 
substitution  shall  not  be  less  than  the  aggregate  amount 
of  the  participation  certificates  theretofore  issued  then 
outstanding  and  evidencing  the  ownership  of  undivided 
or  other   partial   shares   or   interests,    or   participation,    in 

[181] 


Mortgage  Insurance  BLYTH,    WITTER   &    CO. 

Substitution  in  such  group  of  Securities;  and  provided  further,   that  the 

securities  on  which  c  •. 

participation  certifi-  right  of  Substitution  hereinbefore  provided  and  the  exer- 

cates  based — condi- 

tions  governing—  cise  thereof  shall  not  alter  or  affect  the  status  of  such 

Continued. 

participation  certificates  as  legal  investments  for  trust 
funds,  insurance  companies,  banks,  banking  institutions 
and  trust  companies  as  hereinbefore  provided,  or  as 
securities  acceptable  by  the  State  of  California,  its  officers 
and  officials,  as  comprising  or  constituting  any  fund  or 
deposit,  or  any  part  thereof,  required  by  law  to  be  made 
with  the  State  of  California,  or  any  officer  or  official 
thereof,  by  any  trust  company  or  insurance  company 
doing  business  in  the  State  of  California. 


182] 


APPENDIX  Penal  Code 

PENAL  CODE. 

RELATING  TO  FRAUDS  IN  THE  MANAGEMENT 
OF  BANKS. 

Penal  Code  Sections  561,  5Sla,  561b,  561c,  561d  and  563a 
and  563b. 

Section  561.      An  officer,   director,  agent,  teller,   clerk  Bank  officer,  direo- 

,  .   ,  tor,  etc.,  over- 

or  employee  or  any  bank,  who,  either  drawing  or  permit- 


1 .    Knowingly  overdraws  his  account  with  such  bank 


ting  overdraft,  or 
receiving  commis- 
sion in  procure- 


and  thereby  obtains  the  money,   notes  or  funds  of  any  i^an,'etc!i  guilty" 

111  of  felony 

such  bank;  or 

2.  Asks  for,  receives,  or  consents  or  agrees  to  receive, 
any  commission,  emolument,  gratuity  or  reward,  or  any 
promise  of  any  commission,  emolument,  gratuity  or  re- 
ward, or  any  money,  property  or  thing  of  value  or  of 
personal  advantage  for  procuring  or  endeavoring  to  pro- 
cure for  any  person,  firm  or  corporation,  any  loan  from, 
or  the  purchase  or  discount  of  any  paper,  note,  draft, 
check  or  bill  of  exchange  by  any  such  bank,  or  for  per- 
mitting any  person,  firm  or  corporation  to  withdraw  any 
account  with  such  bank,  is  guilty  of  a  felony. 

Section  561a.     Any  officer,  director,  trustee,  employee  Misappropriation, 

etc.,  by  bank  direc- 

or  asent  of  any  bank  in  this  state,  who  abstracts  or  wil-  tor.  employee,  etc. 

=>  "^  — felony. 

fully  misapplies  any  of  the  money,  funds  or  property  of 
such  bank,  or  wilfully  misapplies  its  credit,  is  guilty  of  a 
felony.  Nothing  in  this  section  shall  be  deemed  or  con- 
strued to  repeal,  amend  or  impair  any  existing  provision 
of  law  prescribing  a  punishment  for  any  such  offense. 

Section  561b.      Every  director  of  a  bank  in  this  state  ^!^"''"'/^*Jk-' 

V  participation 

•^  therein,    by  director 

.,.,       — misdemeanor. 

1 .  In  case  of  the  fraudulent  insolvency  of  such  bank, 
shall  have  participated  in  such  fraud;  or 

2.  Wilfully  does  any  act  as  such  director  which  is 
expressly  forbidden  by  law  or  wilfully  omits  to  perform 
any  duty  imposed  upon  him  as  such  director  by  law,  is 
guilty  of  a  misdemeanor. 

[183] 


Penal  Code BLYTH,    WITTER    &    CO. 

The  insolvency  of  a  bank  is  deemed  fraudulent  unless 
its  affairs  appear  upon  investigation  to  have  been  admin- 
istered clearly,  legally  and  with  the  same  care  and  dili- 
gence that  agents  receiving  a  compensation  for  their  ser- 
vices are  bound,  by  law,  to  observe. 

Guaranty  or  en-       Section  5  6  1  c.     An  officer  or  agent  of  any  bank  in  this 

dorsement,  for  bank, 

by  officer  or  agent,  state,    who   makes  or  delivers  any  guaranty  or  endorse- 

misdemeanor.  ^     ^ 

ment  on  behalf  of  such  bank,  whereby  it  may  become 
liable  upon  any  of  its  discounted  notes,  bills  or  obliga- 
tions, in  a  sum  beyond  the  amount  of  loans  and  dis- 
counts which  such  bank  may  legally  make,  is  guilty  of  a 
misdemeanor. 

Director  concurring        Section  56  Id.     A  director  of  a  bank,  organized  under 

in  vote  for  illegal  ° 

bank  loan  or  dis-  the  laws  of  this  state,  who  concurs  in  any  vote  or  act  of 

count;  or  •' 

the  directors  of  such  corporation,  or  any  of  them,  by 
which  it  is  intended  to  make  a  loan  or  discount  to  any 
director  of  such  corporation,  or  upon  paper  upon  which 
any  such  director  is  liable  or  responsible  to  an  amount 
exceeding  the  amount  allowed  by  the  statutes;  or 

Director,  officer,       Any  director,  trustee,  officer  or  employee  of  any  such 

employee  making  r       j  j 

or  attempting  illegal  bank  who  makes  or  maintains,   or  attempts  to  make  or 

deposit  of  bank  ^ 

funds;  or  maintain,  a  deposit  of  such  bank's  funds  with  any  other 
corporation  on  condition,  or  with  the  understanding,  ex- 
press or  implied,  that  the  corporation  receiving  such  de- 
posit make  a  loan  or  advance,  directly  or  indirectly,  to 
any  director,  trustee,  officer  or  employee  of  the  corpora- 
tion so  making  or  maintaining  or  attempting  to  make  or 
maintain  such  deposit;  or 

confeaUnsdi™^'un?3       ^^^  officcr  or  employee  of  any  such  bank  vvho  inten- 
pu°  dias"eVr°sai';  of  ^^o^a^^Y  conceols  ffom  the  directors  or  trustees  of  such 

t^we^n^me'e'ti'n''^^  ^or  ^^"^''^   ^^y  cSiscounts   or  loans  madc   by  it   between   the 

failing  to  report  regular  meetJmgs  of  ks  board  of  directors  or  tmslees,  or 

same  when  so  re-  -^  ' 

quired  by  law—  jj^e  purchase  of  any  secisrities  or  the  sale  of  its  securities 

guilty  of  misde- 
meanor, ^xi'i'ui^  the  same  period,  or  laiowJngly  fails  to  report  to 

the  bonrd  of  directors  or  trustees  v/hen  required  to  do  so 

f!841 


APPENDIX Penal  Code 

by  law,  all  discounts  or  loans  made  by  it  and  all  securi- 
ties purchased  or  sold  by  it  between  the  regular  meet- 
ings of  its  board  of  directors  or  trustees,  is  guilty  of  a 
misdemeanor. 

Nothing  in  this  section  shall  render  any  loan  made  by 
the  directors  of  any  bank,  in  violation  thereof,  invalid. 

Section  563a.     Any  officer,  director,  trustee,  employee  officer,  director, 
or  agent  of  any  bank  organized  under  the  laws  of  this  makiner  false  entry 

.  ^  .  .  ^  .  or  omitting  to  make 

state,  w^ho  makes  a  false  or  untrue  entry  m  any  book  or  required  entry, 

....  ^    .  guilty  of  felony. 

any  report,  tag  or  statement,  or  the  business,  arrairs  or 
condition,  in  w^hole  or  in  part,  of  such  corporation,  with 
intent  to  deceive  any  officer,  director  or  trustee  thereof, 
or  any  agent  or  examiner,  private  or  official,  employed 
or  lawfully  appointed  to  examine  into  its  condition  or 
into  any  of  its  affairs,  or  any  public  officer,  office  or 
board  to  w^hich  such  bank  is  required  by  law  to  report, 
or  w^hich  has  authority  by  law^  to  examine  into  its  affairs, 
or  into  any  of  its  affairs,  or  who,  w^ith  like  intent,  wil- 
fully omits  to  make  a  new  entry  of  any  matter  particu- 
larly pertaining  to  the  business,  property,  affairs,  assets 
or  accounts  of  such  bank  in  any  book,  report,  statement, 
or  tag  of  such  bank  miade,  w^ritten  or  kept,  or  required 
to  be  made,  w^ritten  or  kept  by  him  or  under  his  direc- 
tion, is  guilty  of  a  felony. 

Section   563b.      Any  person  who  wilfully  and  know-  Making  or  circulat- 
ing untrue,  deroga- 

ingly  makes,   circulates  or  transmits  to  another  or  others  tory  statement  as 

to  financial  condition 

any  statement  or  rumor,  w^ritten,  printed  or  by  w^ord  of  of  bank,  misdemeanor. 
mouth,  which  is  untrue  in  facts  and  is  directly  or  by  in- 
ference derogatory  to  the  financial  condition  or  affects 
the  solvency  or  financial  standing  of  any  bank,  doing 
business  in  this  state,  or  who  knowingly  counsels,  aids, 
procures  or  induces  another  to  start,  transmit  or  circu- 
late any  such  statement  or  rumor,  is  guilty  of  a  misde- 
meanor punishable  by  a  fine  of  not  more  than  one  thou- 
sand dollars  or  by  imprisonment  for  not  more  than  one 
year,  or  both. 

[185] 


General  Laws  BLYTH.    WITTER   &    CO. 

GENERAL  LAWS. 
Chapter  496,  Statutes  1917. 

Liquidation  of  General  Laws,  Chapter  496,  Statutes    1917,   relating  to  the  liquida- 
banks.  tion  of  banks, referred  to  in  note  to  Sec.    136   of  Bank  Act. 

An  act  relating  to  the  liquidation  of  banks  by  the  superintendent 
of  banks;  empow^ering  him  to  levy  assessments  against  the 
members  and  stockholders  of  any  bank  in  process  of  liqui- 
dation by  him  to  an  amount  which  he  may  determine  to  be 
necessary  to  promptly  pay  the  creditors  of  such  bank  in  full; 
to  enforce  such  assessments  by  suit  and  empowering  the 
superior  court  to  determine  the  equities  of  the  members  and 
stockholders  of  any  such  bank  to  any  surplus  which  may 
remain  after  the  payment  of  the  creditors  of  such  bank  in 
full   and   to   award   and   distribute   the   same   accordingly. 

(Approved  May  17,1917.     In  effect  July  27,   1917.) 
The  people  of  the  State  of  California  do  enact  as  follows: 

Supt.,  taking  posses-       Section    1.      Whenever   the   superintendent    of   banks 

sion  of  bank  busi-     ,,,,  ,  i  .  c      ^         ^         •  1 

ness  in  liquidation,  shall  hereafter  take  possession  of  the  business  and  prop- 
to  determine  as  to  iii-i-  •!_•  £1- 

assessment  of  stock-  erty  of  any  bank  doing  business  m  this  state  tor  the  pur- 

holders,  etc.,  to  pay  ri..!-  .  re    •  -iiil  1_ 

claims,  pose  of  liquidating  its  altairs,  as  provided  by  law,  he 
may  at  any  time  during  the  process  of  such  liquidation 
determine  whether  it  shall  be  necessary  to  assess  the 
members  or  stockholders  of  such  bank  in  order  to 
promptly  pay  the  claims  of  the  creditors  of  such  bank  in 
full  and  he  shall  make  such  assessments  as  he  may  deter- 
mine to  be  necessary  for  that  purpose. 

Determination  to       Section  2.     Such  determination  shall  be  evidenced  by 

make  assessment  .    .  •  ii         c      i  1  l 

evidenced  by  filing  a  Complaint  or  petition  against  all  or  the  members  and 

court    petition.  ,,ii  r  iiiriii  i  •  i  r 

stockholders  of  such  bank  hied  by  the  superintendent  or 
banks  in  the  superior  court  of  the  county  where  the  prin- 
cipal place  of  business  of  such  bank  is  or  was  located  at 
the  time  of  the  taking  of  such  possession. 

First  assessment       Section  3.      If  such  assessment,  first  made,  shall  prove 

proving  inadequate,   .  ii       r     i  i-  £  i     i  l     •       r    ii 

Supt.  may  make  fur-  inadequate  to  pay  all  or  the  creditors  ot  such  bank  in  full 

ther  assessments.     ,  .  ,  r    i  i  i  f         l_ 

the   superintendent   or    banks   may  make   rurther  assess- 

[186] 


APPENDIX  General  La 


ment  or  assessments  by  filing  supplemental  complaints 
or  petitions  in  the  same  proceeding. 

Section   4.      In   any  such   proceeding   such   assessment  Collection  and 

application  of  pro- 

shall  be  enforced  and  collected  and  the  proceeds  thereof  ^eeds  of  assess- 

mcntSi 

shall  be  added  to  the  funds  of  such  bank  and  applied  by 
the  superintendent  of  banks  for  the  payment  of  just 
claims  against  the  same. 

Section    5.       If   after    the    payment    of   all    just    claims  Disposition  of  sur- 

r    T         •  1       .  plus  after  payment 

agamst  such   bank  and   the  cost  or  liquidation   any  sur-  of  claims,  etc. 
plus  shall  remain  said  court  shall  determine  the  equities 
of  the  respective  members  and  stockholders  of  such  bank 
thereto  and   direct  the  payment  thereof  by  the  superin- 
tendent of  banks  accordingly. 

Section   6.      The  superintendent  of  banks  shall   have  supt.  has  power  to 

I  maintain  action  to 

power  to  maintain  an  action  in  any  other  state  or  coun-  enforce  assess- 

fi  11       .  I  ,  .  ment  in  other  state 

orce  and  collect  such  assessments  against  any  or  country. 

of    such    members    or    stockholders    and    the    proceeds 

thereof  shall  become  a  part  of  the  fund  and  be  subject 

to  the  same  disposition  as  if  collected  in  the  proceedings 

provided  for  in  this  act. 

Section  7.     This  act  shall  not  affect  any  action  or  pro-  Act  not  to  affect 

,...  Ill  •  1  ril  •  proceeding  instituted 

ceedmg  instituted   by  the  superintendent  or  banks  prior  prior  to  enactment. 
to  its  enactment. 

Section  8.  If  any  section,  subsection,  sentence,  clause 
or  phrase  of  this  act  is  for  any  reason  held  to  be  un- 
constitutional, such  decision  shall  not  affect  the  validity 
of  the  remaining  portion  of  this  act.  The  legislature 
hereby  declares  that  it  would  have  passed  this  act,  and 
each  section,  subsection,  sentence,  clause  or  phrase 
thereof,  irrespective  of  the  fact  that  any  one  or  more 
other  sections,  subsections,  sentences,  clauses  or  phrases 
be  declared  unconstitutional  or  its  operation  or  applica- 
tion is  or  may  be  limited  or  controlled  by  any  constitu- 
tional provision. 

fl871 


Bulletin  BLYTH,  WITTER  &   CO. 


BULLETIN  No.  1. 

"Bulletin  No.  I,"  referred  to  in  note  to  Section  5,  stating  regula- 
tions governing  banks  desiring  to  establish  insurance  agency, 
as  provided  in  Section  5   of  the  Bank  Act. 

Regulations  govern-  Gentlemen : 

ing  banks  desiring  i  i  i  i     •  i 

to  establish  insur-        I   am    pleased    to   advisc   you    that   an   amendment   to 

ance  agency  under  riii  i-ii/T  if 

Sec.  5  of  Bank  Act— section  five  of  the  bank  act  which  1  offered  for  enact- 
ment has  been  passed  by  the  legislature,  signed  by  Gov- 
ernor Stephens,  and  is  operative  as  of  this  date. 

Under  authority  of  this  change  in  the  law,  banks  lo- 
cated and  doing  business  in  any  place,  the  population 
of  which  does  not  exceed  five  thousand  persons,  may  act 
as  agents  for  a  fire,  life  or  other  insurance  company. 

My  purpose  in  suggesting  this  new  function  of  state 
banks  in  small  communities  was  to  permit  the  indulgence 
of  an  activity  which  will  be  of  public  convenience  and 
advantage  and  which  will  place  those  banks  that  consti- 
tute the  smaller  units  in  the  state  system  upon  a  com- 
petitive equality  with  similar  institutions  controlled  by 
national  regulation. 

In  this  connection,  I  recall  federal  legislation  which 
gives  to  national  associations  the  privilege  now  granted 
to  state  banks,  and  I  am  gratified  to  announce  the  ac- 
complishment in  this  regard  of  a  policy  of  establishing 
state  institutions  upon  a  parity  with  those  of  national 
organization  in  securing  profitable  and  safe  exercise  of 
their  desire  to  meet  the  demands  of  their  contributory 
communities. 

In  what  follows,  please  observe  and  strictly  adhere  to 
the  various  locality  and  corporate  requirements  neces- 
sary to  engage  in  the  agencies  designated. 

A  bank  operating  under  the  authority  of  state  laws 
and  desiring  to  avail  itself  of  the  provisions  of  the  "bank 
act"  as  amended  and  operative  as  of  date  July  22,  1919, 
relative  to  acting  as  agent  for  an  insurance  company, 
must  be  located  in  a  place  the  population  of  which  does 

[188] 


APPENDIX Bulletin 

not  exceed  five  thousand,  as  shown  by  the  last  preceding  ^Regulations  govern- 

•f  ^  o    mg  banks  desiring 

decennial    census    or   any   subsequent    official    census.  ^°  establish  insur- 

'  8nce  agency  under 

The  insurance  company   for  which  the  bank  acts   as  ffcontinu^d"'' ^°* 
agent  must  have  been  authorized  by  the  Insurance  Com- 
missioner of  California  to  do  business  in  this  state. 

The  activities  of  the  bank  as  such  agent  must  be  re- 
stricted to  the  soliciting  and  selling  of  insurance  and  the 
collection  of  premiums  on  policies  issued  by  the  insurance 
company. 

The  bank  may  receive  for  services  so  rendered  such 
lawful  fees  or  commissions  as  may  be  agreed  upon  be- 
tween the  bank  and  the  insurance  company  for  which  it 
may  act  as  agent. 

The  bank  is  prohibited  from  assuming  or  guarantee- 
ing the  payment  of  any  premium  on  insurance  policies 
issued,  through  its  agency,  by  its  principal. 

The  bank  is  prohibited  from  guaranteeing  the  truth 
of  any  statement  made  by  an  assured  in  filing  his  appli- 
cation for  insurance. 

The  powers  conferred  are  to  be  exercised  under  such 
regulations  as  may  be  prescribed  by  the  Superintendent 
of  Banks. 

In  pursuance  of  the  foregoing  amendment  the  follow- 
ing regulations  are  hereby  prescribed  for  banks  which 
may  undertake  to  act  as  agents  for  insurance  companies: 
1 .  Each  contract  of  agency  must  be  formally  ac- 
cepted by  the  board  of  directors  of  the  agent  bank  by  a 
resolution  spread  upon  the  minutes  in  the  following  form: 

"Be  it  resolved  that  the  contract  of  agency  entered  into 
on ,    19 ,   between   the 

insurance  company  and  the 

bank  of  ,  by , 

president   (or  vice  president)    and , 

cashier,   or  secretary,   a  copy  of  w^hich  is  on   file  in  this 
bank,   is  hereby  ratified  and  approved.** 

[1891 


Bulletin BLYTH.  WITTER  &   CO. 

Regulations  govern-        2.    A  Certified  copv  of  such  rcsolution,  attested  by  the 

ing  banks  desiring  ^  •'  •' 

to  establish  insur-  president  or  vice  president  and   by   the  cashier,    or  sec- 

ance  agency  under  ^  •.  ^ 

Sec.  5  of  Bank  Act.  retary,  and  by  a  majority  of  the  directors  of  the  bank, 

Continued.  •'  •'  i  j 

must  be  forwarded  to  this  office. 

3.  There  should  be  on  file  in  the  bank,  available  for 
inspection  by  examiners  of  this  department,  the  follow- 
ing documents: 

(a)  An  authoritative  statement  showing  the  popula- 
tion of  the  town  according  to  the  last  preceding  decennial 
census  or  any  subsequent  official  census. 

(b)  A  proper  certificate  from  the  Insurance  Commis- 
sioner of  California  showing  as  to  each  insurance  com- 
pany for  which  the  bank  is  acting  as  agent  that  such  com- 
pany has  received  authority  from  the  said  Insurance  Com- 
missioner to  transact  business  in  this  state. 

(c)  A  proper  certificate  or  other  writing  of  each  in- 
surance company  for  which  the  bank  acts  authorizing  the 
bank  to  act  as  its  agent,  setting  forth  that  the  bank  does 
not  guarantee  the  payment  of  any  premium  on  insurance 
policies  issued  through  its  agency  by  its  principal,  and 
stating  that  the  bank  is  not  to  be  held  responsible  for 
the  truth  of  any  statement  made  by  an  assured  in  filing 
his  application  for  insurance. 

(d)  Copies  of  all  reports  made  by  the  agent  bank  to 
each  insurance  company  which  it  represents. 

4.  The  bank  will  be  required  to  keep  a  record  as  to 
each  company  for  which  it  acts  as  agent  showing: 

(a)  For  fire  insurance:  The  amount  of  each  policy, 
the  rate  and  premium,  date  of  commencement,  term,  and 
date  of  expiration,  as  well  as  a  description  of  property 
insured,  with  name  of  assured,  and  to  whom  loss  is  pay- 
able. 

(b)  As  to  life  insurance:  Amount  and  date  of  pol- 
icy, with  premium,  and  a  statement  as  to  under  what 
form  the  insurance  is  written,  giving  also  name  of  as- 
sured and  beneficiary. 

[1901 


APPENDIX  Bulletin 


— Continued. 


(c)    As  to  any  and  all  other  forms  of  insurance:     The  Regulations  govern- 
ing banks  desiring 

fullest   possible   particulars   as   to   amounts,    dates,    rates,  *°  establish  insur- 
ance agency  under 
premiums,  and  what  is  insured  by  the  policy,  and  of  col-  ^^c.  5  of  Bank  Act 

lection  of  all  premiums  collected  for  account  of  the  com- 
pany, refunds  made,  the  proportion  of  premium  credited 
to  the  profits  of  the  bank  under  its  agreement  with  the 
company,  the  proportion  due  the  company,  the  amounts 
and  dates  of  all  remittances  made  to  the  insurance  com- 
pany on  account  of  premiums  collected,  and  the  balance, 
if  any,  due  from  the  bank  to  the  insurance  company. 

5.  The  bank  w^ill  be  required  to  carry  on  its  general 
ledger  an  account  which  will,  at  all  times,  show  the 
amount  due  to  insurance  companies  for  which  it  is  act- 
ing as  agent,  on  account  of  premiums  collected  but  not 
remitted,  and  this  liability  must  be  shown  in  reports  of 
condition  and  in  the  published  statements  of  the  bank 
under  the  heading  "Other  liabilities — on  account  of  in- 
surance premiums  collected  and  not  remitted,"  unless 
specifically  provided  for  in  the  report. 

6.  The  bank  should  also  keep  such  records  as  may  be 
required  by  each  insurance  company  in  the  manner  and 
under  the  forms  prescribed  by  the  various  companies;  all 
of  which  should  be  available  for  inspection  by  the  exam- 
iner on  request. 

7.  The  agent  bank  must  not  assume  any  responsibility 
or  liability  for  either  the  adjustment,  settlement,  or  pay- 
ment of  losses  under  any  policy  issued  by  or  through  its 
agency. 

8.  The  records  of  all  profits  derived  from  the  insur- 
ance agency  should  be  carried  in  a  separate  account  on 
the  books  of  the  bank,  and  the  records  should  be  so  kept 
as  to  enable  the  examiner  readily  to  trace  to  the  source 
all  items  of  profit  derived  in  this  connection. 

Yours  very  truly, 

CHARLES  F.  STERN, 

Superintendent  of  Banks. 

II9I] 


Letter  BLYTH,  WITTER  &   CO. 

PROCEDURE    IN   ASSUMING   TRUST-COMPANY   FUNCTIONS. 

Form  of  letter  from  State  Banking  Department  referred  to  in  note 
to  Section  48a  stating  requirements  imposed  on  Banks  de- 
siring to  assume  trust-company  functions  under  Section  48a 
of  Bank  Act. 

Requiremenis  im-        In  connection  with  your  desire  to  assume   trust  com- 
posed on  Banks  -.  .  ..  .>  ii-i- 

assuming  trust  pany    tunctions    in    association    with    your    banking    busi- 

f  unctions  under  -il  •!  .i-.  .1  i 

Sec.  48a,  Bank  Act  ness,  wc  wish  herewith  to  outhne  to  you  the  procedure 
necessary  for  you  to  observe  as  incident  to  our  duty  of 
visitation  and  supervision  of  your  trust  company  func- 
tions. As  you  are  aware,  the  legislature  of  California 
adopted  at  its  recent  session  enabling  acts  to  permit  this 
department  to  authorize  for  deposit  with  the  State  Treas- 
urer of  California  such  securities  as  are  required  by  the 
national  act  which  permits  you  to  undertake  a  trust  com- 
pany business.  These  enabling  statutes  of  California 
will  be  operative  as  of  date  July  22,  1919,  and  on  and 
after  that  date  we  shall  be  glad  to  entertain  from  you 
any  application  for  the  authorization  of  securities  which 
is  necessary  under  both  state  and  national  law.  If  we 
inay  be  of  any  service  to  you  in  expediting  your  assump- 
tion legally  of  trust  company  powers,  we  shall  be  very 
glad  to  have  you  command  us. 

Incident  to  any  application  that  you  may  make  to  this 
department  for  the  authorization  of  a  deposit  of  secur- 
ities v/ith  the  State  Treasurer  of  California,  we  will  thank 
you  to  submit  to  us  the  following: 

( 1 )  A  duly  certified  copy  of  a  resolution  of  your 
board  of  directors  determining  upon  the  conduct 
of  a  trust  company  business  and  authorizing  the 
steps  required  by  law  to  be  taken  to  the  accom- 
plishment of  that  end.  We  shall  require  a  copy 
of  this  resolution  certified  by  the  secretary  of 
your  bank  and  under  your  corporate  seal. 

(2)  A  duly  certified  copy  of  permission  of  the  Fed- 
eral Reserve  Board  granting  you  authority  to  en- 
gage in  a  trust  company  business. 

1192] 


APPENDIX  Letter 


(3)    You    must    segregate    and    assign    to    the    State  ^®i"i'«'"«°ts  im- 

-r  £      1         o  r    /^    1   r  posed  on  Banks 

1  reasurer  or  the  otate  or  California  securities  in  assuming  trust  func- 

f  •  -1  -n^rii,  .         *'°"^  under  Sec.  48a, 

conformity  with  section  96  of  the  bank  act  in  the  Bank  Act— Continued. 
sum  of  $  1  00,000  for  the  faithful  performance  and 
due  execution  of  your  private  trust  business,  and 
$100,000  for  the  faithful  performance  and  due 
execution  of  your  court  trust  business.  Care 
should  be  taken  that  the  securities  chosen  shall  be 
of  the  character  established  by  section  96  of  the 
bank  act.  In  presenting  these  securities,  please 
accompany  them  with  the  following: 

(a)  A  resolution  of  the  board  of  directors  segregat- 
ing, depositing  and  assigning  the  designated  se- 
curities to  the  State  Treasurer  of  California  for 
the  purposes  indicated,  setting  forth  a  description 
of  the  securities  in  detail  and  authorizing  and  di- 
recting the  officers  of  the  corporation  to  execute 
the  necessary  assignments. 

(b)  An  assignment  of  the  securities  as  above  indicated 
executed  by  the  officers  of  the  corporation. 

(c)  In  the  case  of  mortgages  secured  by  real  estate, 
it  should  be  borne  in  mind  that  the  amount  of 
the  mortgage  can  not  exceed  50%  of  the  fair 
market  value  of  the  property  and  that  the  prop- 
erty must  be  productive  and  income  bearing.  We 
shall  require  the  following  documents  concerning 
such  a  mortgage: 

1 .  The  mortgage  showing  recordation. 

2.  The  notes  secured  by  such  mortgage. 

3.  An  abstract  of  title  or  a  policy  of  title  insur- 
ance showing  that  the  mortgage  and  the  notes 
secured  thereby  are  a  first  lien  upon  the  prop- 
erty in  question. 

4.  An  appraisal  of  the  property  covered  by  the 
mortgage  or  deed  of  trust  made  by  two  dis- 

fI931 


Leti( 


BLYTH,  WITTER  &  CO. 


Requirements  im- 
posed on  Banks 
assuming  trust  func- 
tions under  Sec.  48a, 
Bank  Act. 
— Continued. 


interested  appraisers  not  affiliated  with  the 
bank,  setting  forth  the  fair  market  value  of 
the  property,  indicating  the  value  of  the  real 
estate  and  of  the  improvements  separately, 
and  indicating  also  that  the  property  is  pro- 
ductive and  income  bearing. 

5.  Policies  of  fire  insurance  covering  the  im- 
provements, if  any,  upon  the  property  under 
the  lien  of  the  mortgage  or  deed  of  trust. 

(d)  If  any  of  the  securities  offered  for  deposit  with 
the  State  Treasurer  of  California  are  bonds,  these 
bonds  should  be  accompanied  by  an  authorita- 
tive opinion  running  to  their  character  and 
legality. 

If  all  of  the  documents  and  securities  are  in  form,  we 
will  so  advise  the  State  Treasurer  of  California  by  issuing 
our  authorization  to  him  to  accept  such  securities  on  de- 
posit for  purposes  indicated.  We  will  then,  upon  the 
acceptance  by  the  State  Treasurer  of  California,  inform 
you  of  your  complete  qualification  as  far  as  is  required 
by  the  law  of  this  state. 

We  desire  that  all  of  the  above  described  documents 
in  connection  with  this  deposit  of  securities  by  you,  ex- 
cept the  policies  of  fire  insurance,  should  they  be  a  part 
of  your  deposit,  should  be  submitted  to  this  department 
in  duplicate,  one  to  be  forwarded  to  the  State  Treasurer 
with  the  deposit,  and  the  other  to  be  retained  in  this 
department  for  our  record.  In  bringing  forward  cer- 
tificates of  title,  if  such  are  used,  the  certificate  should 
show  the  assignment  to  the  State  Treasurer  of  California. 
If  you  deposit  bonds,  we  will  thank  you  to  send  them  di- 
rectly to  the  Treasurer  of  California  to  be  held  by  him 
for  your  credit  until  he  receives  from  this  department  the 
authorization  to  accept  them  on  deposit  as  is  required 
by  law. 


[194] 


APPENDIX  Letter 


For  your  information,   we  are  enclosing  you  the  fol-  ^o®s'^ed^on"Banks'" 

lowing:  assuming  trust 

°  '  functions  under 

Sec.  48a,  Bank  Act 

(  I  )  Form  of  resolution  to  be  adopted  by  your  board  —Continued. 
of  directors  authorizing  certain  of  your  officers  to 
assign  certain  certificates  for  the  faithful  perform- 
ance and  due  execution  of  your  court  trust  busi- 
ness and  for  the  faithful  performance  and  due 
execution  of  your  private  trust  business. 

(2)  Form  of  assignment  of  the  securities  which  your 
board  of  directors  shall  authorize  to  be  placed  on 
deposit  with  the  State  Treasurer. 

If  there  be  any  other  question  incidental  to  your  pur- 
pose to  install  a  trust  department,  we  shall  be  glad  to  be 
at  your  command  for  its  consideration. 

Yours  very  truly, 

CHARLES  F.  STERN, 

Superintendent  of  Banks. 


195] 


BANK  ACT  OF  CALIFORNIA. 
INDEX 


Section 

Acceptances,  bankers*,  when  eligible  for  savings  banks 67 

By  commercial  banks,  how  limited  80 

Relation   to   loans   in  commercial  banks 80 

Trade,  when  eligible  for  savings  banks 67 

Act,   applicable  to   certain   corporations 1 

Applicable   to   violators   of   provisions    of I,  145 

Bank,   repeals  all  acts   in   conflict 146 

Effective  when   _ 147 

Title  of  I 

Action,  against  bank  for  escheated  deposits 15 

Against  superintendent  of  banks  134,  136,  142 

Brought   under   bank   act,    jurisdiction   in 136b 

For  sale  of  real   estate,   w^hen 54 

May  be  maintained  by   superintendent   of  banks  to   dissolve   bank 135a 

Reports  are  prima  facie  evidence  in,   when 142 

To  recover  penalties  by  attorney  general 144 

Adjustment  of  investments  made  prior  to   this  act 145 

Administrator,    deposits   by   51 

May   deposit   with  trust   company 91,92,93 

Trust   company   may   act  as 90 

Trust  company,   oath    required 90 

Advertisement,    building    and    loan    associations    not    to    advertise    as    savings 

bank  12 

Capital,  must  show  amount  paid  up 14 

For   deposits,    prohibited   when   '2 

Liabilities  must  show  separate  '^ 

Of  banks,  how  regulated  28 

Of   branch    offices,    how    regulated 28 

Of  conversion,   state   bank   into   national  bank 56a 

Of   merger    3  la 

Of  notes,  bonds  or  securities,  limited  when 61 

Of  sale  of  bank   31 

Of    unauthorized    banking    prohibited    '2a 

Of  unauthorized    trust    company    prohibited '2a 

Resources   must   show   separate    '^ 

Savings,   shall  not  be  advertised  by  whom 49 

Surplus   must   show   separate   '^ 

Undivided  profits   must  show   separate '^ 

Advisory  board,  loan  to  member  of "■' 


[197] 


BLYTH,  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA — Continued 

Section 

Affidavit,    reports   of  banks 130,   130a 

Reports  of  trust  companies 101 

Agent,    liability    for    fraud 38 

Of  commercial  bank,   loan  to 83 

Of  foreign  bank,   must  take  oath 1  I 

Of  savings  bank,  may  borrow  funds 65 

Overdraft   of,    prohibited    39 

Prohibited  loans  to,   must  be   reported 65,  83 

Purchase  of  assets  or  obligations  of  bank,  by 41,  42 

Restriction  on  purchase  of  assets  or  obligations  of  bank  by 41,  42 

Sale  of  note,  bond  or  contract  to  bank  by 35 

Special  deputy  superintendent  of  banks  in  liquidating  bank 136 

Superintendent  of  banks  for  service  in   foreign  bank 7 

When  commercial  bank  may  act  for  insurance  company 5 

Agreement  of  consolidation  must  be  filed 3  la 

Of  consolidation  must  have  approval 31a 

Sale  and  purchase   31 

Amendment  of  articles  of  incorporation  must  be  filed 8 

Of  articles  of  incorporation,  see  Sec.   290a,   Civil  Code. 

Amortization  of  bonds  by  savings  banks 61 

Annexation,  as  affecting  powers  of  banks  and  branch  offices 23,  60,  82 

Annual  Report,  copies  for  distribution 140 

Of  superintendent   of  banks  to   contain  what 140 

Appeal   from  order  of  superintendent  of  banks 134,   136 

From   seizure   of   bank   property 134,   136 

Applications  to  do  banking  business,  investigation  of 127,  128 

To   establish  foreign  branch  office 58 

Appointment  of   appraisers 61a,  99,   124 

Of  special   deputy   superintendent  of  banks 136 

Of   superintendent    of   banks   "20 

Apportionment  of  capital  and  surplus  to  court  trust  business 90 

Of  capital  and   surplus  to   departments 23,  60,  90 

Of  capital  and  surplus  to  private  trust  business 90 

Appraisal  of  property  mortgaged  to  state  treasurer  by  trust  company 99 

Of    securities    61a,  99,   124 

Appraisers,    appointment    of    6Ia,  99,   124 

Articles  of  Incorporation,   amendments  must  be   filed 8 

As  affected  by  bank   act 8,   145 

May   provide   for   departmental  banking 22 

Must  be  certified  by  secretary  of  state 8 

Must  be  filed  with  superintendent  of  banks 8 

Not   effective  until   filed  8 

Of   trust    company    "U 


[198] 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

ARTICLES  OF  INCORPORATION— Continued  Section 

On    consolidation    or   merger 3  la 

Violation    of,    by    banks    134,   135a,   136 

When  filed  by   banks  128 

Assessment,   effect  on  first  lien  on  real  estate 57 

Failure    of    bank    to    pay 123 

Of  banks,    how   calculated  123 

Of  banks,  for  state  banking  fund 123 

Refusal   of   stockholder   to    pay 133 

Stockholders  must  be  notified  133 

When    capital    stock   impaired    133 

Assets,   commercial  bank  may  pledge  for  "borrowed  money"   to  what  extent..      2  la 

How  may  be  reached  in  merger 31a 

Invested    in    bonds    36,  46 

May  not  be  carried  in  excess  of  actual  cost,  except 45 

Of  banks,    relation   of  loans  thereto 44 

Of  departments  held   for  depositors 27 

Of   departments  may  be   transferred,    when 25 

Of  departments  to  be  kept  separate 26 

Overdrafts  limited  to  ninety  days 21a 

Purchased   by    directors,    officers   and   employees 41,42 

Relation    of   to   investments    36,  46 

Relation  of,  to  loans  by  savings  banks 67 

Sale  and  purchase  •*  ' 

Shall   not  be  mingled  with  trust   funds 32 

Shall  not  be  pledged  to  give  preference 21a 

Assignee,    deposits    by ^''  ^'>  "^ 

Assistants   of   state   banking   department   '2" 

Attorney,   designation   of  superintendent  of  banks  by   foreign   corporations 7 

May  be  employed  in  liquidating  

Of   state   banking   department    

Attorney  General,   actions  brought  by,   to   recover  penalties 144 

Duty   in   action   for   escheated   deposits 

Auditor,    superintendent   of   banks   shall   provide 

Authorization,   certificate   for  branch  office 

Certificate  for  commercial  bank '^'' 

Certificate  for  foreign  bank  

Certificate   to   representative  of   foreign  bank  or   trust   company I  2c 

17  7  128 
Certificate    for   savings   bank    ''"• 

19  7  1 9  ft 
Certificate   for  trust   company ^^'' 

Of    consolidation    

Of  loans  to  directors,  members  of  advisory  boards,  agents  and  employees 

Q  "1 

in   commercial   banks  

1199] 


BLYTH.  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

AUTHORIZATION — Continued  Section 

Refusal  of  by  superintendent  of  banks 128 

Refusal  of  by  superintendent  of  banks  for  branch  office 9 

Bad   Debts,    compounding   of 136 

What   are   21a 

Bailee,  savings  bank  may  act  as,  for  United  States  bonds 70 

Balance,   sale  of  stock  for  assessment 133 

Unclaimed    deposits    1  5 

Bank,  annual  report  of  superintendent  of  banks 140 

Application   to   do  business  127,   128 

Articles  of  incorporation  must  be  filed 128 

As    a    borrower    21a 

As  member  of  federal   reserve  bank,   subject  to  state  laws 56 

Assessed    for    state    banking    fund 123 

Banking   corporation,    how   organized   3 

Bond   investment   limited    36,  46 

Branch  office  9 

Capital    impaired    1  33 

Ceasing  business,  must  take  what  action 136a 

Classified  as  to  capital  by  population 23 

Commercial,  purposes  of  5 

Conducting  business  in   unsound  manner 134,  135a 

Connection  with,  by  superintendent  of  banks  prohibited 120 

Considered    insolvent,    w^hen    20 

Definition  of  2 

Departmental,    separate  books  to   be   kept 26 

Departmental,    shall    make    reports    separately 129 

Departmental,    shall    publish   statements    separately 129 

Deposit  with,  does  not  create  debt,  when 55 

Dissolution   of,  by  process  of   law 135a 

Dissolved,    funds   of   137 

Distribution  of  funds  of  insolvent 136 

Escheat  of   unclaimed   deposits 15 

Examination  of,   before  issuance  of  certificate 127 

Examination   of,    by    court   136 

Examination    of,    by    directors    139 

Examination   of,   once  a  year 124 

Examination  of,   when   failing   to   report 138 

Examiner,  failure  to  report  insolvent  condition 126 

Examiner,  must  file  oath  125 

Examiner,  shall  not  act  as  receiver,  when 125 

Expiration   of  corporate  existence  136a 

Extra    examination,    expense   of   124 

Failure  to   make   report,  penalty 138 


[2001 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

BAKK — Continued  Section 

Failure  to  pay  assessment  123 

Federal    reserve,    exempt   from    examination 48 

Fines,   may   be   compromised   before   action   instituted 144 

Foreign,   inspection   of 124 

Foreign,   see  Corporations,   Foreign. 

Forfeitures,   ho'w   recovered  144 

Forfeitures,   may  be   compromised  before  action  instituted 144 

Funds,   when  deposited  v^'ith  other  banks 43,  68,  85 

Impairment   of    capital    133,  136 

In  liquidation,   names  posted  141 

Insolvent    condition   of,    failure    to    report 126 

Inspection   of,    by    superintendent    of   banks 124 

In   unsafe   condition  136 

Investment  in  bonds  limited  3S,  46 

Investments,    changed   to    conform   to   act 145 

Investments  in   own   stock  prohibited 34 

License   to   foreign   corporation ' 

Limited    time   to    repair   capital 133 

Limited  time  to  report  138 

Limited  to  investment  in  safe  deposit 30,3  7 

Liquidation  of,  by  superintendent  of  banks 136 

Loans   on   own   stock   prohibited   34 

May  acquire  stock  in  safe  deposit  corporation,   when 3  7 

May  acquire  stock  in  trust  company,  when 3  7 

May  apply  to  court  to  dissolve '3/ 

May  be  cited  to   show  cause '^^ 

May  conduct  safe  deposit  department  30 

May   consolidate,    how   ^'^ 

May  engage  in  foreign  banking,   how ^8 

May   go   into   voluntary   liquidation 136a,  137 

May  join  federal  reserve  bank  -'6 

May  purchase   real  estate,   when  61,84,   105 

May  resume  business,  when  '-^" 

Must  carry  assets  at  actual  cost,  when ^^ 

Must  have  certificate   of  superintendent  of  banks ^4 

Must  liquidate,  when  '^°^ 

Must  not  purchase  real  estate  contract,   note  or  bond,  when 3  5 

Must  report  loans  made  to  directors,  etc 

Must  sell  or  exchange  other  real  estate,  when 

Mutual,  may  have  capital  stock  

Name,  change  of,  see  Sec.    1278,  Code  of  Civil  Procedure. 

•     •  12  7 

Names  of,    not   to   be   similar 

National,  examination  of  

[2011 


BLYTH.  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

BANK — Continued  Section 

New,   information  of,   to  be  posted 141 

Obligations   or  assets   of,   when  purchased  by  officers,   directors  and   em- 
ployees   4 1 ,  42 

Organization  of,   previous  consent  of  superintendent   required 127 

Penalties  imposed,  how  recovered  144 

Penalties  pecuniary,   may  be   compromised  before  action   instituted 144 

Publication   of    report   of   132 

Publication    of    unclaimed   deposits    15 

Purchase    of   3  1 

Refusal  to  observe  order  of  superintendent  of  banks 136 

Refusal  to  submit  books  135a,   136 

Report  of,   to  superintendent  of  banks 130 

Rights  of   creditors   in  merger  3  la 

Sale   of   3  1 

Savings,    purposes    of    4 

Shall  not  own  stock  of  corporations,  except 37 

Shall   not  transact  business  without  certificate 127 

Signs  must  show  business  conducted  28 

Stationery  must  show  business  conducted  28 

Stock,  as  collateral,   limited  44 

Stock,  minimum  par  value,   except 53 

Suspending   payment   of    obligations    l35a 

Trust  company,   purposes  of  6 

Use    of    term    restricted 12 

Violation  of  articles  of  incorporation 134,   13ja,   136 

When   unsafe   to   continue   business 135a 

Bank  Acceptances,    how   limited   67,  80 

Bank  Act,  annual   report  of  superintendent  of  banks,   as  to 140 

Applicable  to   all   violators   of  provisions   of 1,  145 

Effective  when   1  47 

In   relation  to   prior  investments 145 

Jurisdiction    in   actions   brought   under 136b 

Repeals  all  acts  in  conflict  146 

Short   title    of   1 

What   applicable    to    1,   145 

Banking  Business,   conducted  in  unsafe  manner 134,   135a 

Certificate  to  be  posted  50 

Banking,    defined    2 

Departmental    22 

Regulation    of   7,9,   12,   12a.   13,90 

Unlawful    unless    duly    authorized 2 

When    advertised    must    have    certificate    12a 

Banking  Corporations,   see  Corporations,   Banking. 


;202] 


INDEX 
BANK  ACT  OF  CALIFORNIA— Continued 

Section 
Banking  Department,  see  State  Banking  Department. 

Bank  Premises,   departments  to  be  in  same  or  adjoining  buildings 26 

Investment   in,    by    commercial   banks    84 

Investment    in,    by    savings   banks 6  1 

Investment   in,   by   trust   company 105 

Trust   company  may  mortgage  to   state   treasurer,   when 9  7 

Bills  of  Exchange,  commercial  bank  may  accept,  when 80 

Commercial  banks  may  buy  or  discount  80 

Not  construed  to  create  debt,  when   55 

Relation  to  loans  in   commercial  bank  80 

When  eligible  for  savings  banks  67 

Bond   of  deputy   superintendent   of  banks I  2  1 

Of   special   deputy   superintendent   of   banks 136 

Of  superintendent  of  banks  120 

Bonds,   advertisement  of,   limited,   when 61 

Available   for   deposit   by   trust   company    96 

Certified,  official   list  to   be  kept  61a 

Commercial  banks  limited  in   investing   in   36,  46 

Corporate,  foreign  corporation  may  act  as  trustee 90 

Cost    of    investigation    of    61a 

For  deposits  by  court  order,  not  required 94 

Foreign  corporations  may  buy  and  sell,  when 12c 

Guaranteed  by  mortgage  insurance  as  investments,  when.. 61,  105,  106 

Guaranteed  by   mortgage  insurance,   available  for  deposit  by  trust  com- 
panies,   when    96,  99 

Legal  as  investment  for  savings  banks  61 

Must   be   certified,    when    61,  61a 

Penalty   for  illegal   advertisements   of   61 

Power  of   superintendent   of   banks   to    investigate 61a 

Savings  banks  limited  in  investing  in   67 

Savings  banks  may   acquire  for  debt  61 

Savings   banks   may   loan   on   67 

United  States,   loans   on   by   commercial   banks 65,  80,  83 

Books,  audit  of,  by  request  '24 

Examination  of,  by  directors  '3" 

Inspection  of,  by  superintendent  of  banks -^O 

Must  show  actual  cost  of  assets,  when 45 

Of  departments  to  be  kept  separate 26 

Refusal  of  bank  to  submit '35a.   136 

Borrowed  Money,  by  commercial  banks  to  purchase  United  States  securities...  21a 

By  savings  banks  must  be  approved,  when o^ 

Commercial  banks  may  pledge  assets  for,   to  what  extent 21a 

Excess  loan  to  savings  bank   not  invalid  as   to   lender 62 

[2031 


BLYTH.  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

BOEROWED  MONEY— Continued  . .  Section 

Limit    on    amount    borrowed    21a 

Rediscounts  by  savings  banks  excepted,  when 62 

Savings  bank  may  borrow  any  amount  to  purchase  United  States  securi- 
ties      62 

Savings   bank   must   report,   when 62 

Superintendent  of  banks  may  extend  limit 21a 

Borrower,  endorser  and  guarantor,   deemed  to  be 66 

Branch    Office,    capital    required 9 

Capital  required  to   establish  foreign  branch 58 

Certificate   necessary   to   open 9 

Effect  of  consolidation  of  cities  on 23,  60,  82 

Permission   to   establish   foreign   branch,   how   obtained 58 

Regulations    governing    advertising    and    stationery 28 

Right   to    establish,    in    foreign    country,    a    dependency    or    possession    of 

United  States   58 

Shall  not  be  permitted  to   close,  when 9 

Shall  not  be  permitted  to  open,   when 23 

Signs   of,    must    shovsr   what 28 

Building  and   Loan   Association,   advertising,   how   restricted 12,   12a 

Bulletin,    information   to    general    public 141 

To  be   filed  as  public   document 141 

To  be  posted  by  superintendent  of  banks 141 

Business,   authorization   to   commence   9,   127 

Ceased  by   trust   company 102 

Closing    of    1 37 

Examination    of    1 24 

Merger    of    3  la 

Reports    of    130,  1  30a 

Sale   of   3  1 

Winding    up    affairs    of 136 

By-Laws,    amendments    must   be    filed 8 

Must  be  filed  with  superintendent  of  banks 8 

Not  effective   until   filed   8 

Of  savings  banks  must  prescribe  what 64 

Call  for  reports  from  banks,   how^  often 131 

Called  Report,   failure  of  bank  to  make,  penalty 138 

From   bank,    how    often   131 

Of   bank,    publication   of 132 

Time   limited   for   bank    to   make 138 

To   coincide  with   call   of   comptroller  of   currency,   when 131 

To    contain   what    130,  130a 

Capital,  advertising  of,  must  show  what 14 

Apportioned  to   departments  23,  60,  90 


;204] 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

CAPITAL — Continued  Section 

Assigned   by    foreign   corporation    7 

Impairment    of    133,   136 

Increase    or   decrease    of 8,  23 

Increase  or  decrease  of,  see  Sec.   290a,  Civil  Code. 

Invested    in    bank    premises,     furniture    and    fixtures    and    safe    deposit 

vaults    6  1 .  84,   105 

May  be  increase  by  surplus  21 

Must  be  paid  up  before  issuance  of  certificate 127 

Necessary   to   open   branch   office 9,  58 

Not  required  against  public  deposits  or  postal  savings  vyrhen  secured 19 

Of  commercial  bank,  relation  to  deposits 19 

Of  foreign  corporation  to  be  separate 7 

Of  savings  bank,  in  what  invested 61 

Of   savings  bank,    relation    to    deposits 19 

Of   trust   company,   how   invested   105 

Of   trust   company,    in   what   invested   105 

Paid  up   and  surplus  must   equal  what 19 

Reapportionment   to   departments   23 

Relation  of  surplus  to   2  1 

Restriction  as  to  loans  66,  80 

Capital  Stock,   as  collateral,   limited 44 

Assessed  when  '  ^* 

Banks  shall  not  invest  in  their  own 34 

Banks  shall  not  loan  on  their  own 34 

Commercial  bank,  amount  required 82 

Directors  of  domestic  bank  must  hold '0 

May   be    sold   for   assessment   '33 

Mutual   banks  niay   issue,    how ^9 

Of  corporations  engaged  in  foreign  banking,  banks  may  purchase,  when..         58 

Of  safe  deposit  corporation,  when  may  be  invested  in 3  7 

Of  title  insurance  company  doing  trust  business 106 

Of  trust  company,  when  may  be  invested  in 3  7 

Reduction    of    

Required    according    to    classification 23,  60,  8- 

Required   by    trust    company    

Requirements    pertaining    to    

Savings   bank,    amount   required 

Certificate,   mortgage  participation,   legality  of   for   savings  banks 61 

Mortgage  participation,  when  available  for  deposit  by  trust  company 96,  99 

Necessary  before  transaction   of  business 

Necessary   for   new  department   

Of  deposit,  not  construed  to  create  debt,  when 

Of  deposit,   savings  bank  may   issue 

[2051 


BLYTH.  V/ITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

CEETIFICATE— Continued  Section 

Of  special  deputy  superintendent  of  banks  to  be  filed 136 

Of  superintendent  of  banks,  filing  31a,  128 

Of  superintendent  of  banks,  in  merger 31a 

Of  superintendent  of  banks,  shall  be  issued,  when 128 

Of  superintendent  of  banks  to  be  posted 50 

Of  superintendent  of  banks  to  be  withheld,  when 7,  9,  12c,  127 

Of  superintendent  of  banks,   to  state  what  127 

Of  trust  company,   w^hen  revoked   98 

Requisite    fee    24 

Revoked,   w^hen  trust  business   ceases 102 

To  open  branch  office  9 

Certificate  of  Deposit,  bank  can  not  make  partial  payments  on 21a 

Certification   of  bonds   by  superintendent   of  banks 61,  61a 

Of  public  utility  bonds,  expiration  of  61a 

Of  superintendent   of   banks,   not  to   obligate  the  state 61 

Certified   Checks,    issuance    unlawful,    when 52 

Must  be  immediately   charged  52 

Checks,    certified,    must   be   charged 52 

Certified,  when  unlawful   52 

Chief  Deputy,  failure  to   report  insolvent  condition  of  bank 126 

Citation,   issued   by   superintendent   of   banks 134 

City,   assessment  by,   effect  on   first  lien 57 

Bonds   of,   available  for  deposit   by   trust   company 96 

Legality   of  bonds  of   61 

Claims  against  bank  in  liquidation 136 

Objection    to,    liquidation    136 

Classification,  as  applied  to  banks  previously  organized 23,  60 

Of   banks    2 

Of   cities,    governed   by    federal    census 23,  60 

Of  cities  in  relation   to   capital   and   surplus 23,  60,  82 

Of    trusts    1  0  I 

Club,   loans   to,    exemptions   in   favor   of 65,  83 

Collateral,  commercial  bank  may  pledge  assets  to  what  extent 21a 

Directors   to   receive   report  on 139 

Collateral  Trust,  bonds,   when  legal  for  savings  banks 61,  61a 

Commercial    Bank,    advertising,    how    regulated 28 

Bond    investments    limited    36,  46 

Capital   and   surplus,   their   relation   to    deposits 1  9 

Capital    required    82 

Classified  as   to    capital   by   population 23 

Definition  of  5 

Deposit  vkfith   another   commercial   bank,    regulated 85 

How   organized   to    conduct 3 


206] 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

COMMERCIAL  BANK— Continued  Section 

Investment    in   bank    premises    84 

Loans   of,  limited   80,  81 

Loans  on  securities  of  United  States  Government,  how  may  be  made 80 

Loans   to   affiliated   bank.   83 

Loans   to   corporations   80,  83 

Loans   to   director,    agent    or   employee    on    United   States    securities    per- 
mitted      83 

Loans  to   directors  and   employees 83 

Loans  to  members  of  advisory  board  83 

Loans   to    officers  prohibited    83 

May  accept  drafts  or  bills  of  exchange,  when 80 

May  act  as  agent  for  fire,  life  or  other  insurance  company,  when 5 

May  borrow  money  to  what  extent  21a 

May   pledge  assets   to   what   extent 2  la 

May  rediscount  with   federal   reserve  bank 21a 

May  be   duly   authorized   2 

Overdrafts  limited  to  ninety   days  as  assets 21a 

Overdue    interest,    how    limited    2  la 

Purposes    of    ^ 

Real  estate  loans  restricted  47 

Reserve    required   20 

Shall  not  assume  or  guarantee  insurance  premium 5 

Commercial  paper,  commercial   banks  may  buy   or  discount 80 

Loans  on,  by  commercial  banks,   how  governed 80 

Savings  bank  may  discount  or  purchase,  when 67 

Commission  to  officers,   directors  and  employees  prohibited 39 

Condition,   must   be  published   '32 

Consolidation,    approval    of    stockholders 31a 

Approval   of   superintendent   of   banks   required 3  la 

Articles  of  incorporation  and   consolidation 3  1a 

How  assets  of  merged  banks  may  be  reached 31a 

Liability   of  banks   in   ^'^ 

Of    banks    3  '^ 

Of   cities,    effect   on   branch    offices 23,  60,  82 

Rights   of    creditors    in    ^'^ 

Construction,  all  preceding  or  conflicting  acts  repealed 146 

Create    debt    ^^ 

Contract,  real  estate,  not  to  be  purchased  by  bank,  when 3  5 

With   officers,    directors   or   employees 41,42 

With  savings  depositor  

Conversion   of  state  bank  into   national  banking  association 56a 

Notice   to    depositor    of    savings    bank -'"^ 

Corporate   Existence,    obligations   of   bank   after    expiration 136a 

[207] 


BLYTH.  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

Section 

Corporations,   club,   exemptions  in   favor   of  loaning 65,  83 

Consolidated  3  la 

Doing   title  insurance  and  trust  business 107 

For    banking,    how    organized    3 

Loans  of,  when  officers,  directors  or  employees  of  bank  interested 65,  83 

May  deal  in  exchange  or  letters  of  credit,  when 13 

Membership,   exemptions  in  favor  of  loaning 65,  83 

Mortgage  insurance,  securities  of,  as  deposit  by  trust  company 96,  99 

Mutual,   may  issue  capital  stock 29 

Powers  and  privileges   must   conform   to   act 145 

Prohibited  loans  to,   must  be   reported 65,  83 

Religious,   exemptions  in   favor  of   loaning 65,  83 

Sale  and  purchase  31 

Shall  not  use  word   "savings"   when 12,  I  2a,  12c,  49 

Shall  not   use  word   "trust"   wrhen 12,   12a,   12b,   I  2c,  102 

Stock  of,   as   collateral,   limited   44,  67 

Stock  of,  banks  shall   not  own 37 

Corporations,   Banking,   may   do   departmental   business,    when 22 

Must   file   certain   papers   8 

Organization   of  I  27 

Corporations,  Foreign,  acceptance  of  deposits  prohibited 7 

As  fiscal  agents  90 

Banking   functions  limited   7 

Loans  based  on  total  capitalization,  v^rhen 7 

May   act   as   executor,    when 7 

May  act  as  trustee   in  this  state   for  what  purpose 7,  90 

May   buy   and   sell   bonds,   when    12c 

May  lend  certain  moneys  not  assigned  to  this  state 7 

May   lend  money   in   this   state 7,  12c 

Must  execute  power  of  attorney  to   superintendent   of  banks 7 

Pow^ers  permitted  to   foreign   trust   companies 7,  90 

Representative  of,  may  maintain   office,  when 12c 

Service  of  papers  7 

Service  of  process 7 

Shall  report  to  state  banking  department 130 

Subject  to   state  laws  7 

Costs,    in    liquidation    136 

In  sale  of  certain  real  estate  54 

Counsel,    compensation,   liquidating  delinquent   banks 136 

County,   assessment  by,    effect   on   first   lien 57 

Bonds  of,  available  for  deposit  by  trust  company 96 

Legality    of    bonds    of    61 

County  Clerk,  articles  of  incorporation  and  consolidation  must  be  filed  with 31a 

[208] 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

Section 

County   Deposits   in   savings  banks 62 

Reserve  against,   not   required   20,  68 

When  secured,  bank  not  required  to  maintain  capital  against 19 

Court  may  authorize  deposit  with  trust  company 91 

May  order  deposit  with   trust   company   93 

May  require  knowledge  of  private  trusts 103 

Court  Trust,   definition  of   101 

To   be   separately   secured   96 

When   deemed   to   include   private    trust 101 

Create  Debt,   meaning  of,   restricted 55 

Creditors,   rights  of,  against  banks  sold 3  1 

Rights  of,   against  merged  bank 31a 

Rights   of,    in   liquidation   136 

Debt,  savings  banks  shall   not  contract,    except 62 

Deceased  Depositors,  amount  due  to,  must  be  reported 1  5 

When  moneys   due  to,    escheat 15 

Deeds  of  Trust,   legal   for  deposit  by  trust  companies 96 

Definition  of  bank  2 

Of   commercial   bank   5 

Of  commercial  paper  eligible  for  savings  banks 67 

Of   "electrical   corporation"  61 

Of    "gas   corporation"    61 

Of   "net  earnings"   61 

Of    "pipe    line    corporation"    61 

Of    "public    utility"    61 

Of   "railroad   corporation"  61 

Of   "reserve   depositary"    20 

Of   "reserves   on    deposit"   •^^ 

Of   "reserves  on  hand"   ^" 

Of    savings   bank    ^ 

Of   "street    railroad   corporation" "' 

Of    "telegraph    corporation"    " ' 

Of    "telephone    corporation"    "' 

Of   "total   reserves"    ^" 

Of  trust   company    " 

Of    "water    corporation"    

Departmental  Bank,  application  for  permission  to  conduct 23 

Apportionment    of    capital    and    surplus 23,  60,  90 

Assets   to   be   held   for  depositors,    how *•' 

26 

Assets   to   be   kept  separate   ^" 

Books  of  account  to   be   kept   separate ^^ 

Classified   as   to   capital   by   population ^^ 

Conducted   by   trust   company   ' "° 

[209] 


BLYTH,  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

DEPARTMENTAL  BANK— Continued  Section 

Conversion   into   national   bank   56a 

Corporation   may   transact  business  of 22 

Departments  to  be  in  same  or  adjoining  building 26 

Deposits,    conditions   of   repayment   27 

Investments,  hov^  held  27 

May    transfer   assets,    when    25 

New  department  must  have  certificate 24 

Reapportionment   of   capital   and    surplus 23 

Relation    of    departments   26 

Shall  make  separate  reports  of  departments 129 

Shall  publish  statements  of  departments  separately 129 

Statement  of   segregation   of   capital   and   surplus 23 

Total  reserves  required   25 

Departmental  Business,  by  title  insurance  companies 107 

Deposit,    by   administrator   51 

By    assignee    5  1 

By   executor   5  1 

By   guardian   5  1 

By   order   of   court   5  I 

By    receiver    5  1 

By  trust  department  with  commercial  department  of  same  corporation 25 

By  trust  department  with  savings  department  of  same  corporation 25 

By  trustees  5  I 

Certificate  of,  savings  bank  may  issue 63 

In  federal  reserve  bank,  by  state  bank 48 

In  national  bank,  by  state  bank 48 

Of  postal   savings   in    savings   banlcs 62 

Of  trust  companies  with  state  treasurer  to  be  increased  w^hen 93 

Of  trust  companies   with   state   treasurer   to   consist   of   what 96 

Trust   companies   may   mortgage   premises   to   state   treasurer,   when 97 

Depositary,  designation  by  superintendent  of  banks 43 

Federal   reserve  bank,    for   state   bank 48 

Federal   reserve  bank  may  act  as 43 

Federal  reserve  bank  need  not  be  designated  by  superintendent  of  banks  43 

National    bank    acting   as   48 

Reserve,    how   nominated   and    designated 20 

Savings  bank  as  bailee  for  United  States   bonds 70 

Depositor,   contract  with,   in   savings  bank 64 

Deceased 1  5 

Of  savings  bank  converted  into  national  bank,  notice  to 56a 

Repayment  to,  by  savings  banks  64 

Savings,  may  be  paid  by  draft  62 

Unknow^n    1  5 


:2io] 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

Section 

Deposits,  additional  to  be  made  by  trust  company,  when 98 

Advertising  for,   prohibited  when 12 

By  trust  department  with  other  departments  of  same  bank 25 

Escheat  of 1  5 

Must  not  be   increased,   when    19 

Not  construed  to  create  debt,  when 55 

Of  a  commercial  bank  with  another   commercial  bank,    regulated 85 

Of   banks    43 

Of  foreign   corporation  to  be  separate 7 

Of  other  banks  with  savings  banks 68 

Of  savings  banks  with  other  banks 68 

Of  trust  company,  may  be  withdrawn  from  state  treasury 98 

Of  trust  company,  securities  may  be  exchanged 96 

Of  trust  company   securities,   documents  and  appraisal 99 

Reserve   required   for  20,68,   105 

Savings,    advertised    49 

Savings   bank,    in   what   invested    61,  67 

Savings  bank,   repayment  of 64 

State,   county,   municipal  and  postal,   in   savings   banks 62 

Trust    company,    in   what    invested    lOS,  106 

Unclaimed    1 5 

Unclaimed,   when  bank   suspends   business 136a 

When  preferred   5  1,  62 

When  public  deposits  and  postal  savings  may  be  excluded  from  aggregate         19 

With   other   banks   by    departments   25 

With   trust   company,   authorized  by   court 91 

With   trust   company,   by   administrator 91,92,93 

With  trust  company,  by  court  order 93 

Deputy  of  superintendent  of  banks,    qualifications  of 121 

Of   superintendent   of   banks,    salary 121 

Of  superintendent  of  banks,   shall   execute  bond,   when 121 

Designation   of   depositary   •^0,  43 

Directors,   committee  of,  examination  of  bank  by 139 

Eligibility    of    '^ 

Examination   of  bank   by   '•'" 

Increase    or    decrease    of    " 

Increase  or  decrease  of,  see  Sec.   290a,  Civil  Code. 

In    merger    ^  '* 

Liability   for   fraud   •'° 

List  of,  to  be  posted  '  ' 

May  authorize  loans  to  directors,  agents  or  employees 83 

May  be   removed   when    '  *' 

May   declare   dividend,   when    ^  ' 

F21I1 


BLYTH.  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

DIRECTORS — Continued  Section 

May    demand   special    examination    of   bank 139 

May  employ  assistance  in   examinations  139 

May   sell   note,  bond  or  contract   to  bank,   when 35 

May    sell    stock   for   assessment 133 

Must  hold  monthly  meetings  1  I 

Oath    of    1  1 

Of   commercial  bank,    loans  to 83 

Of  savings  bank,   in   relation   to   corporation   loans 65 

Of   savings   bank,    loans    to    prohibited 65 

Of  savings  bank  may  borrow  on  United  States  securities 65 

Of  savings  bank,   shall   not  be   endorsers 65 

Overdraft   of,   prohibited   39 

Prohibited  loans  to,  must  be  reported  65,  83 

Purchase  of  assets  or  obligations  of  bank,  by 41,  42 

Qualifications    of    10,   M 

Restriction  on  purchase  of  obligations  or  assets  of  bank,   by 41,  42 

Shall    levy    assessment,    w^hen    133 

Shall   not   receive  commission  39 

Discount,    banks    of    5 

Of  bills  of   exchange,    amount   of 80 

Of   commercial   or   business   paper,    amount   of 67,  80 

Relation  to  loans  in  commercial  banks 80 

Dissolution,  banks  shall  have  right  to  make  application  for 137 

Causes   for   1 36 

Proceedings  in   136,  137 

District  Bonds,  legal  for  investment  by  savings  banks,  when 61,  61a 

Dividends,  accrued  but  unpaid  interest  not  calculated 45 

Directors  may   declare,    under  what   conditions 21 

Escheat   to   state,    when   137 

From   banks   in   liquidation    136 

In  receiver's  hands,   how  disposed  of 137 

Of  savings  banks,   how   restricted   64 

Of  suspended  banks  136a 

Paid  out  on   court   order   137 

Trust  company  may  receive,   on  securities  deposited 96 

When   escheated  to   state,   invested   how 137 

Dominion  of  Canada,  bonds  and  notes  of,  as  investments  for  savings  banks....         61 

Draft,  savings  depositors  may  be  paid  by 62 

Commercial   bank    may   accept    80 

Earnings,   disposition  of  21 

Electrical    Corporation,    definition    of 61 

Eligibility    of    directors    '0 

Employees,   liability  for  fraud   38 


[212] 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

EMPLOYEES — Continued  Section 

May  sell  note,  bond  or  contract  to  bank,  when 35 

Of   commercial  bank,   loans   to 83 

Of  savings  banks,   may  borrow  funds 65 

Of  state   banking   department   121 

Overdraft   of,    prohibited   39 

Prohibited  loans  to,   must  be   reported 65,  83 

Purchase  of  assets  or  obligations  of  bank,   by 41,  42 

Restrictions  on  purchase  of  obligations  or  assets  of  bank,  by 41,  42 

Shall   not   receive   commission   39 

Endorser,   deemed  to  be  borrower,  when 66 

England,   bonds  and  notes  of,   as  investments  for  savings  banks 61 

Entries,    penalties    for   false 38 

Escheat  of  deposits,   duty  of  attorney   general  in  action 15 

Of  deposits,   duty   of  county   clerk,   in  action 15 

Escrow-Holder,   not  subject   to   supervision   of   superintendent  of  banks  acting 

as    trustee,    when    "O" 

Elxamination,  at  expense  of  bank,  when 58,   138,   139 

By  examiners  of  federal  reserve  bank,  when 56 

Causes  for   dissolution   134,  136 

Federal    reserve   bank   exempted    48 

Of  bank   by   committee  of   directors 139 

Of  banks,   before  issuance  of  certificate  127 

Of    banks    by    directors   '39 

Of    banks,    special    124,  139 

Of  banks,   upon  failure  to   report  138 

Of  foreign  branch   offices ^° 

Of    national    banks    ^" 

Of   organization   documents   by   superintendent   of   banks 8,  127 

Of   securities   for   deposit   by   trust   companies 96,  97,  98,  99 

Of  state  bank  members  of  federal   reserve  bank 56 

Of    trust    department    of    national    bank 48a 

Report  of,  by  superintendent  of  banks,  prima  facie  evidence 142 

Special,    per    diem    charged   '^^ 

Elxaminer,    failure   to    report   insolvency '  ^^ 

May    administer    oath    '  ^^ 

Must    take    constitutional    oath    '^■* 

Oath   of,    must  be   filed,   where '25 

Of   state   banking   department   '^' 

Shall    not   be   appointed    receiver,    when '25 

Elxecutor,    deposits   by   -^  '  •  ^'>  ^^ 

Foreign   corporation  may  act  when 

Trust  company  may  act  as  "•  "" 

Trust   company,    oath    required   

[213] 


BLYTH.  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA — Continued 

Section 

Existence,    corporate,    obligations   after    expiration    of 136a 

Elxpense    of    state   banking    department 48a,   122,  123,  124 

Express  Company  has  power  to  receive  money   for  transmission 13 

Federal  Farm  Loan  bonds  legal  for  investment  by  savings  banks 61 

Federal  Reserve  Bank,    exempted   from   examination 48 

May    act    as    depositary    20,  43,  68 

Need  not   be   designated   as   depositary 43 

State   banks   may   join   56 

State   members   may   apportion   their   investment   in   stock   of 56 

State  members  subject  to  state  laws 56 

Trust   company  member  may  continue  to  act 90 

Federal   Reserve  Board,   regulations   of,   on   bankers'   acceptances 67 

Fee   for   appraisal    of   trust    company    securities 99 

For   branch    office    9 

For  certificate  for  representative  of  foreign  corporation 1  2c 

For  certificate  to  do  banking  business 9,  24 

For   examination  of  documents  accompanying  trust   company  securities..  99 

For   filing   proceedings   in   liquidation   136b 

For   investigating    bonds    61a 

For  services  rendered  trust  department  of  national  bank 48a 

For  serving  process   on   foreign    corporation 7 

For    special   examination    124 

Filing  of  certificate  of  superintendent  of  banks 128 

Of   directors'    examinations    139 

Of   documents   preliminary    to    organization 8,  127 

Of  list   of  unclaimed   deposits 15 

Of  proceedings  in  liquidation   136b 

Fine,   bank,   may  be  compromised  before  action   instituted 144 

First   Lien   on   real    estate,    effect   of   certain   assessments 57 

Fiscal  Agent,   foreign   corporation  as 90 

Foreign   Banking,    investment   in   bank 58 

Regulations   concerning   58 

Right    to    establish    branch    for 58 

Foreign    Banks,    inspection    of    124 

Foreign    Branch,    capital    required    58 

Examination    of    58 

Right    to    establish    58 

Foreign   Corporations,    see   Corporations,    Foreign. 

Foreign  Government  Bonds,  savings  banks  may  invest  in,  what 61 

Forfeitures,    causes    for   dissolution    134,  136 

Of  bank,   pecuniary,   how   may  be   compromised 144 

Of  bank,   recovered  how  144 


[214] 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

FOEFEITTJRES — Continued  Section 

Unauthorized    banking    prohibited    ; 12,   1  2a,  49 

Unlawfully   opening    branch    office    9 

France,  bonds  and  notes  of,   as  investments  for  savings   banks 61 

Funds,   of  commercial  bank  v^^ith  another  commercial   bank,    regulated 85 

Of    receiver,    escheat    to    state,    when 137 

Of   state   banking   department    123 

Paid   into    county   treasury   by   receiver,   w^hen 137 

Paid  out  on   court  order  137 

When  escheated  to  state,   invested  how 137 

Furniture  and  Fixtures  for  offices  of  state  banking  department 122 

Investment  in,   by   commercial  banks 84 

Investment    in,    by    savings   banks   61 

Investment   in,   by   trust   companies   105 

Gas   Corporation,    definition   of   61 

Government  bonds  available  for  deposit  by  trust  company 96 

Legality    of    bonds    of 61 

Governmental   Lien,   not  prior   incumbrance,   w^hen 57 

Governor,   annual   report  of  superintendent  of  banks  to  be  made  to 140 

Superintendent    of    banks    appointed    by 120 

Gratuities   to   officers  prohibited   39 

Guaranteed  Policy  on  mortgage  insurance,  legality  of,   for  savings  banks 61 

Guarantor  deemed  to  be  borrower 66 

Guardian,    deposits    by    51,  91,  93 

Trust   company   may   be,    for    estate 90 

Trust    Company,    oath    required    90 

Hypothecation    of    assets    21a 

Impairment  of   capital   stock   133,  136 

Incorporation,  see  Articles  of  Incorporation. 

Information  accessible   to   general   public 141 

Bulletin  posted  in  office  of  superintendent  of  banks 141 

For   public    1  7 

On   file   for   stockholders '  7 

Injunction  against  superintendent  of  banks 134,  136 

Restraining  use  of  w^ords  or  terms 12 

Insolvent  bank,   duties  of   superintendent  of   banks 136 

Bank,   failure   to   report 126 

Upon   failure   to    restore   reserve   20 

Inspection  of  all  banks  once  a  year '24 

Special    when    necessary    '■^4 

Insurance,  premiums  shall  not  be  assumed  or  guaranteed  by  bank 5 

When  commercial  bank  may  act  as  agent 5 

[215] 


BLYTH.  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

Section 

Interest,  accrued  but  unpaid,  not  profits,  when 45 

On   deposits  of  trust   funds 95 

Overdue   one   year,    debt   considered   bad 21a 

Trust  company  may  receive,  on  securities  deposited 96 

Inventory,    liquidation   of    delinquent   banks 136 

Investigation  of  bonds  and  securities  by  superintendent  of  banks 61a 

Of  bonds  and  securities,  cost  of Gla 

Of  fitness  of  stockholders  128 

Investment    Certificates,    building   and    loan   associations    may    issue 1 2a 

Investments,    bank   shall    not   invest  in   own   stock 34 

By  savings  banks  after  July   1,   1909,  legality  of 66 

Changed    to    conform    to    act,    how 145 

In  bonds  by  commercial   bank   limited 33,  46 

In  stock   of  bank   engaged   in   foreign   or   international   banking 58 

In   stock   of   corporations,   prohibited,    except 37 

In  stock  of  trust  company  or  safe  deposit  company 37 

Of  departments  held  for   depositors   27 

Of  each  department  must  be  separate  26 

Of   trust   funds,    how   regulated 105 

Trust    company,    how   governed 106 

Irrigation  District,   assessment  by,   effect  on  first  lien 5  7 

Bonds   of,   available   for  deposit  by   trust   company 96 

Bonds    of,    legality    of 36,  46,  61,  96 

Judgment  dissolving   bank,   superintendent   of  banks  may  procure 135a 

Jurisdiction   in   actions   brought    under   bank   act 1 36b 

Law,    banking,    effective    when    147 

Governing    banks    joining    federal    reserve    bank 56 

Legality  of  bonds  or  notes  for  savings  banks 61 

Of   investments   prior   to   this    act 145 

Letters  of   Credit,   relation   to  loans   in   commercial  bank 80 

Liabilities,    advertising    to    be    separate 14 

Shall   not  be  increased,   when 20 

Total  of   one  borrower,    how   computed 80 

Liability    for    making    false    statement 38 

Of   directors,    officers   or    employees   for    fraud 38 

Of  stockholders,    can   not  be  v^aived 40 

Liberty   Bonds,   savings   bank   may   receive   as  bailee 70 

License,    forfeiture    of    7,   12c,  58,  98,   134,  136 

Surrendered  upon   conversion    56a 

To    banks    I  27 

To    begin   business,    fee    for 24 

To    foreign    corporations 7 

To  open  branch  offices 9,  58 


:2i6] 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

LICENSE — Continued  Section 

To    representative    of    foreign    corporations,    when 12c 

To   trust   companies  127 

When   may    be    refused    or   withheld 7,9,  12c,   127 

Lien,    governmental   not   prior,    when 57 

Life   Insurance  Companies,  use  of  word   "trust"  by   foreign 1  2b 

Limit,    "borrowed   money,"   amount  of 2  la 

Of   amount   of   real   estate   loans 47,57,67,   105 

Of    deposit    liabilities    19 

Of  deposit  of  banks  in  a  savings  bank _.  68 

Of  deposit  of  commercial  bank  with  another  commercial  bank,  regulated         85 

Of  deposit  of  savings  banks  in  any  one  bank 68 

Of  investment  in  commercial  paper  by  savings  banks 67 

Of  investment  in  safe  deposit  department 30 

Of  loans  by  commercial  banks  46,  47,  80 

Of  loans   by   savings   banks   66,  67 

Of  loans  by  trust  companies  105 

Of  loans  on  bank   or   corporation   stock 44,  67 

Of  purchase  of  bonds  by  commercial  banks 36,  46 

Of  time  for  holding  real  estate  54 

On  deferred   payment  of   interest 2  la 

Superintendent  of  banks  may  extend,  on  n^oney  borrowed 2  la 

Liquidation,   banks  in,   claims  against  136 

Banks  in,  names  to  be  posted  141 

Compensation    of    counsel    in    136 

Costs   in   '  36 

Filing   of  proceedings  in I  36b 

Of  banks  by   superintendent   of   banks 136 

Of    banks,    voluntary    136a,   137 

Proceedings,    notice   to   banks   '36 

Voluntary,    superintendent    of   banks   may    take   possession 136a 

When    corporate    existence    expires    136a 

Loans,  bank  shall  not  loan  on  own  stock 34 

By   banks   to  affiliated   banks   65.  83 

By    commercial    banks,    how   limited 46,47,80,8! 

By  commercial  banks  on  United  States  Government  securities 80,  83 

By  commercial  banks,  to  directors,  agents  and  employees 83 

By  commercial  banks,   to   officers  prohibited 83 

By    foreign    corporations    

By   savings  banks,   how  limited ^'<  ""•  "' 

By  savings  banks  prohibited,  when 6o 

By  savings  banks,    renewal   of 

By   savings    banks   to   directors   on   security    of   United   States   obligations 
permitted    

[217] 


BLYTH,  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

LOANS— Continued  Section 

By  savings  banks,  to  directors  or  officers  prohibited 65 

On   corporation   or   bank   stock,    limited 44,  67 

On  first  lien  on  real  estate,   effect  of  certain  assessments 57 

Prohibited,    must   be    reported   65,  83 

Real   estate   47,  5  7 

Savings  bank,  effect  of  public  utilities  act 61 

Shall   not  be   increased,   when 20 

To   clubs,    religious  or  membership   corporations,   application  of   law 83 

To    corporations,    directors    or    officers    interested 65,  83 

To  directors,   agents  or   employees 65,  83 

To  members  of  advisory  board - 83 

Trust  company,   how  governed 105,  106 

When  savings  banks  must  not  make   new 64 

Location,  governing  capacity  of  commercial  bank  as  insurance  agent 5 

Powers  as  affected  by  consolidation  of  cities 23,  60,  82 

Powers   of   banks   dependent    upon 23,  60,  82 

Powers   of   trust    companies    dependent   upon 23,  90 

Requirements  when  principal  place  of  business  changed 8 

Losses,  may  be  charged  to  surplus,  v^hen 2  I 

Reserve   fund   may  be   charged  with 64 

Shall   be  written   off,   when 21a 

Manager,    of   foreign   bank   must   take   oath 1  1 

Market  Value  of  oil,  mineral  or  timber  land,  how  determined 61 

Of   redwood   timber  land,    for   loans 61 

Meeting   of  directors   once  a   month '  ' 

Of  members  of  mutual  bank  to  capitalize 29 

Of  stockholders,    superintendent   of  banks   may    call 135 

Members  of  bank  may  make  application  to  dissolve 137 

Of  mutual  bank  may  elect  to  capitalize 29 

Membership   Corporations,   loans   to,   exemptions   in   favor   of 65,  83 

Merger,    see   Consolidation. 

Mining  Stock,  loans  on,  by  savings  banks,  prohibited 67 

Mineral   Land,   fixing   market   value   of 61 

Minor,    trust   company   guardian   of  estate   only 90 

Mortgage,   deposited  by  trust  company  with  state  treasurer 97 

Of   trust   company   deposited,    title   and    appraisement 99 

Restriction  as  to  loans  on  47,  57,  67 

Sale  to  banks  by   officers,    etc.,   permitted  when 35 

Mortgage  Insurance,   guaranteed  policy  of,   legality  of,  for  savings  banks 61 

Policy    to    accompany    participation    certificates    deposited    by    trust    com- 

99 
pany  ^' 

Mortgage    Participation    Certificates    available    for    deposit    by    trust    company, 

when     96,99 


[218] 


INDEX 
BANK  ACT  OF  CALIFORNIA— Continued 

MORTGAGE  PARTICIPATION  CERTIFICATES— Continued  Section 

Legality   of   for    savings   banks  61 

Municipal  Assessment,   effect  of,   on   first   lien 5  7 

Municipal   Deposits  in   savings   banks 62 

Reserve  against,   not   required 20,  68 

When  secured,  bank  not  required  to  maintain  capital  against 19 

Mutual  Bank,   how  reserve  fund  shall  be  increased 64 

May   have   capital   stock,   when 29 

Payment  of  losses  out  of  reserve  fund,  when 64 

Relation  of  reserve  fund  to  deposits 64 

Mutual  Water  Company,  bonds  of,  legal  investments,  when 61,  61a 

Name,  change  of,  see  Sec.    1278,  Code  of  Civil  Procedure. 

Restrictions   on   12,  12a,  12b,  12c,  49,   127 

National  Bank,   conversion   of  state  bank  into 56a 

Examination  of  as  depositary 48 

Examination   of   trust   department   4oa 

May  act  in   fiduciary  capacity  48a 

Net  Earnings,  definition  of  61 

Notes,   advertisement  of,  limited  when 61 

Guaranteed  by  mortgage  insurance  as  investments,  when 61,  105,  106 

Guaranteed  by   mortgage   insurance,   available  for  deposit  by   trust  com- 

96.99 


panies 


Legal  for  savings  banks,  when 61 

Notice,  of  assessment  on  stock  '^* 

Of  conversion  of  savings  bank  into  national  bank,   how  given 56a 

Of  liquidation  to   all  banks '56 

Required   by   savings   banks   from    depositors 64 

Oath  of  bank  examiner  '  ■^^ 

Of   directors   '  ' 

Of  managers  or  agents  of  foreign  bank '  ' 

Of  office  of  superintendent  of  banks '20 

Refusal  of   officers  to   be   sworn,   penalty    for 135a,  136 

Who   may  administer  

Officer,  liability  for  fraud  38 

May  sell   note,  bond   or   contract  to  bank,  when 35 

Of  bank,    loans   to   prohibited 65,83,  105 

Of  commercial  bank  in   relation  to   corporation  loans 83 

Of  commercial  bank  shall  not  be  endorser 83 

Of  savings  bank,  in  relation  to  corporation  loans 65 

Of  savings  bank,   shall   not  be   endorser "^ 

Of  trust  company  entitled  to  knowledge  of  private  trusts 103 

39 
Overdraft  by,   prohibited   

Prohibited  loans  to,   must  be   reported o^'  83 

Purchase  of  assets  or  obligations   of  bank,  by '^  '  •  ^^ 

[219] 


BLYTH.  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

OFFICER — Continued  Section 

Refusal  to  be  examined  on  oath 135a,   136 

Restriction  on  purchase  of  obligations  or  assets  of  bank,  by 41,  42 

Shall   not   receive  commission 39 

Offices   of   state   banking    department 122 

Official  Reports  of  superintendent  of  banks,  prima  facie  evidence 142 

Oil  Land,  fixing  market  value  of  6  i 

Order,    refusal  of  bank  to   observe 136 

To  show  cause,  issued  by  superintendent  of  banks 134 

Organization  of  bank,   examination   of  documents 8,   127 

Of  bank,  previous  consent  of  superintendent   required 127 

Of  banking  corporation,  papers  to  be   filed 8 

Of   trust    companies   90 

Overdraft,   limited  to   ninety  days  as  asset 21a 

Prohibited   to   officers,    employees,    etc 39 

Participation   Certificates,   mortgage,   legality  of,   for  savings  banks 61 

Mortgage,  w^hen  available  for  deposit  by  trust  company 96,  99 

Par  Value  of  capital  stock,  minimum,  except 53 

Payment   of   expenses   of   banking   department 123,   124 

Suspended  by   bank,   cause   for  dissolution 135a,   136 

Payment  of  Deposits  by   savings  banks,    notice   required,   v^hen 64 

Penalties  for  encroachment  on  reserves 20 

For    illegal    advertisement    of    bonds 61 

Pecuniary,    may   be    compromised   before   action   instituted 144 

Recoverable   how   1  44 

To  be  paid  into  state  banking  fund 144 

Violators   of  bank   act   subject   to 1,  145 

Per  Diem    charged   for   special    examinations 124 

Personal  Property,   savings  banks  may  loan  on 67 

Petition   of   stockholders   for   dissolution 137 

Pipe   Line   Corporation,    definition    of 61 

Place  of  Business,   see   Location. 

Pledged,  stock  of  directors  of  domestic  bank  must  not  be I  1 

Policy,  Guaranteed,  of  mortgage  insurance,  legality  of  for  savings  banks 6  1 

Political  Lien,   not  prior  incumbrance,  w^hen 57 

Population   governing   capacity  of  commercial   bank  as  insurance  agent 5 

Governing  ratio  of  reserve  required 20 

In   relation   to   capital,    governed  by   federal   census 23 

See  Location. 

Postal  Savings,   commercial  banks  may  borrow^ 2  la 

Deposited  in  savings  banks  62 

Deposits,   reserve  against  not  required 20,  68 

Deposits  when  secured,  banks  not  required  to  maintain  capital  against —  19 

Powers,  building  and  loan  associations,   restrictions  on 12,   12a 


;220] 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

POWERS — Continued  Section 

Of  banks  2,  4,  5,  6 

Or   commercial   banks   5 

Of  savings  banks  4 

Of  trust   companies   6 

Preferred  Claims,   deposits  by  order  of  court  are 5  1 

Deposit  of  banks  in  liquidation  by  superintendent  of  banks 136 

Deposits    of   postal    savings   are 62 

Deposits  of  public  moneys  are 62 

Preferred  Creditors,  bank  shall  not  pledge  assets,   except 21a 

Preferred  Stock,   unlawful  for  banks,   except 53 

President,   loans  to  prohibited  65,83,  105 

Publication   of   unclaimed   deposits 1  5 

Verification  of  reports  130,  I  30a 

Principal   Office  26 

Prior  Incumbrance,  political  or  governmental  not  such,  when 57 

Private  Trust,   definition  of  101 

Not  subject  to  inspection  of  superintendent  of  banks,  except 101 

Officers    entitled    to    knowledge    of 103 

Shall  be  deemed  to  be  court  trust,  when 10! 

Subject   to   supervision,   when 101 

To  be  separately   secured 96 

Trustee    shall    not    disclose,    what 103 

Proceedings,    in    dissolution   136,   137 

In    liquidation,    filing   of    136b 

Reports  are  prima   facie   evidence,   when 142 

To    enjoin   superintendent   of   banks 134,   136 

When  banks  are  merged  31a 

When  bank  sells  assets 3  I 

When  capital  of  bank  is  impaired '33 

When  reserve   falls  below  required  amount 20 

Process,    service    on    foreign    corporations ' 

Profit  and   Loss,    certain   debts   charged   off   to,   when 21a 

Profits,  accrued  but  uncollected,  interest  not  to  be  included  in 45 

Public,    information    for   ' '•   '^' 

Records  of  state  banking   department   not  open  to '42 

Public   Administrator,    deposits   of,   with   trust    company 92 

May  deposit  with  any  bank,  when -* ' 

May   deposit  with  savings  bank,   when ""/2 

Publication,    deceased    depositors,    list   of 

Of  false  statement,  penalty  for ^° 

Of  notice  by  county  clerk  in  escheat  proceedings '5 

Of  notice  of  agreement  of  sale  and  purchase 3 

13  3 
Of  notice  of  assessment  of  stock  

[221] 


BLYTH,  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

PUBLICATION — Continued  Section 

Of  notice  of  conversion,  savings  bank  into  national  bank 56a 

Of  notice  of  liquidation 136 

Of  notice  of  mutual  bank  to  capitalize 29 

Of  notice   of  sale,    affidavit  to   be   filed 3  I 

Of   report  to   superintendent   of  banks 132 

Of  sale  of  real  estate  by  court 54 

Unknow^n  depositors,  list  of  1  5 

Public  Deposits,   reserve  against,   not  required 20,  68 

When  secured,  bank   not   required  to  maintain  capital  against 19 

Public   Moneys,    commercial    banks   may    borrow 21a 

Deposited   in   savings  banks  62 

Public  Utilities  Act,  effect  on  loans  and  investments  by  savings  banks 61 

Public  Utility,  bonds  of,  when  legal  for  savings  banks 61,  61a 

Definition    of    6 1 

Purchase  of  assets  or  obligations  of  banks  by  officers,   directors,   etc 41,  42 

Of    banks    3  1 

Of  departments  of  banks  3  1 

Of  obligations  or  assets  of  bank  by  directors,   etc. 41,  42 

Purposes  of  commercial  banks   5 

Of  savings  banks  4 

Of  title  insurance  and  trust  company   restricted 22 

Of   trust   company   6 

Railroad,    bonds   of,   when   legal   for   savings   banks 61,  61a 

Railroad  Corporation,   definition  of  61 

Ratio  of  capital  and  surplus  to  deposit  liabilities 19 

Of  reserve  to   deposit  liabilities 20,  68,   105,   106 

Real  Estate,  bonds  legal  for  investment  by  savings  banks,  when 61,  61a 

Consisting  of  oil,  mineral  or  timber  land,  how  valued 61 

Contract   not  to  be  bought  by  bank,   when 35 

Held  longer  than  five  years,  proceedings  for  sale  or  exchange  of 54 

Loans   on,   by   commercial   bank 47 

Loans  on,   by   savings  bank   67 

Loans  on,  by  trust  company   105,   106 

Loans  on,   effect  of   governmental   liens 57 

Mortgaged   as   deposit   by   trust   company 96 

Redwood  timber  land,  as  security  for  loans 61 

When   second   mortgages   on,    permitted 47,  67,  80 

Reapportionment  of  capital  and  surplus  to  departments 23 

Receiver  appointed  prior  to  July    1,    1909 137 

Bank   examiner  shall   not  act,   when 125 

Deposits    by    5  1 

Funds   of,    escheat   to    state   w^hen 137 

Funds  of,   held  in  county  treasury,  when 137 


"2221 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

RECEIVER — Continued  Section 

Trust   company,    oath    required   90 

Reclamation  District,  assessment  by,  effect  on  first  lien 57 

Records  of  state  banking  department  not  public  documents 142 

Rediscounts,   commercial  banks  with  federal   reserve  bank 21a 

Not    considered    borrowed    money,    when 21a,  62 

Regulations  governing  foreign  branch  office 58 

Religious   Corporation,    loans   to,    exemptions   in   favor   of 65,  83 

Report,  annual,  of  superintendent  of  banks  to  governor 140 

By  savings  bank  of  money  borrowed  to  purchase  United  States  securities         62 

Failure  of  bank  to  make,   penalty 138 

Loans  to  agents  or  employees  of  savings  bank 65 

Loans  to  directors  and  employees  of  commercial  bank 83 

Loans  to  members  of  advisory  board 83 

Of  banks,    called   for,   how  often '  3  I 

Of  banks,    publication    of    '32 

Of  banks  shall   contain  what   130 

Of  bank,    time   to    make,    limited '38 

Of  banks  to   state  banking  department 130 

Of  examination  by   directors '39 

Of  loans   to   copartnerships   in  which   directors,    agents   or   employees  are 

interested      "3 

Of  loans    to    corporations    in   which    officers,    directors    or    employees   are 

interested      ^5,  83 

Of  prohibited    loans,    must   be    made 65,  83 

Of  unclaimed    deposits    '  ^ 

Official,   of  superintendent  of  banks,   prima   facie  evidence 142 

Special,   to  superintendent   of  banks 130a 

Trust  company   must   report,   what 98,  '0' 

Weekly  bulletin  by  superintendent  of  banks '4' 

Reserve  for  departmental  bank  20,  25,  68,  106 

How    shall    be    restored    ^^ 

May  be  deposited  in  federal  reserve  bank 20,  68 

Not  to  be  carried  against  public  deposits 20,  68 

Of  commercial  banks,    relation   to  deposits ^" 

Of  departments   to    be    kept    separate 25 

Of  savings   banks   

Of  savings  banks,    relation   to   deposits 

Penalty  for  encroachment  on,  in  commercial  banks 20 

Percentage  may  be  kept  in  eastern  cities,  when •'" 

Ratio   required   governed  by   population ^^ 

Required   for    commercial   banks 

Required,   state  members   of   federal   reserve  bank 20,  68 

-r                                     u                             J  106 

Trust   company,    how  governed   

[223] 


BLYTH,  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

RESERVE  FOR  DEPARTMENTAL  BANK — Continued  Section 

Trust  funds  not  to  be   carried  as 32 

Reserve  Depositary,   how  nominated  and  designated 20 

What  banks   may   act   as 20,  43,  68 

Reserve  Fund,  mutual  savings  banks,  amount  required 60 

Of  mutual  savings  bank,  may  be  used  how 64 

Resources,    advertising   to   be   separate 1  4 

Revolving   Fund,    superintendent   of   banks    may    retain 123 

Rulings  on  commercial  paper  by  superintendent  of  banks 80 

Safe  Deposit  Corporation,   banks  may  acquire  stock  in,  when 3  7 

Safe  Deposit  Department,  any  bank  may  conduct 30 

Investment  in,   by   commercial  bank 84 

Investment  in,   by   savings   bank 6  I 

Investment  in,   by  trust   company 105 

SeJe  Keeping,  savings  banks  may  receive  United  States  bonds  for 70 

Safety  Deposits,   in  insolvent  bank 136 

Salary  of  employees  of  state  banking  department 1  2  1 

Of   superintendent   of   banks 120 

Sale  of  banks  or  departments 3  I 

Or  exchange  of  real  estate  held  longer   than   five  years 54 

Savings   of   school    children 9 

Shall   not  be  advertised  by  whom 12,   I  2a,  49 

Savings   Bank    advertising,    how    regulated 28 

Bonds    and    notes,    when    legal   for   investment 61 

Borrowed    money,    approval   of 62 

By-lav^rs   must   prescribe   what    64 

Capital  and  surplus,   their  relation  to  deposits 19 

Capital    stock    required    60 

Classified  as   to    capital   by  population 23 

Contracts    with     depositors 64 

Conversion  into    national  bank 56a 

Corporation   loans,    directors   or   officers   interested 65 

County    deposits    in    62 

Definition    of    4 

Department,   reserve   required  68 

Depositors  entitled  to  notice  of  conversion  into  national  bank 56a 

Depositors  may   be  paid   by   drafts 62 

Deposits  of  other  banks,  with 68 

Employees   or  agents  may   borrow  funds 65 

Foreign  government  bonds,   investment  in 61 

How  organized   to    conduct   3 

Investment   in   bank    premises 61 

Investments,   effect  of  public  utilities  act 61 

Investments,    legality    of    SI,  66 


[224] 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

SAVINGS  BANK— Continued  Section 

Loans,  effect  of  public  utilities  act 61 

Loans  must  be  secured,  how  67 

Loans  of,    limited    66 

Loans  to  affiliated  bank  65 

Loans  to  directors,  agents  or  employees  on  United  States  securities  per- 
mitted     65 

Loans  to  directors  and  officers  prohibited  65 

May  borrow  money  to  purchase  United  States  securities 62 

May  borrow  postal   savings   62 

May  borrovr  public  money  62 

May  issue  certificates   of  deposit   63 

May  purchase  or  discount  bankers*  acceptances,  when 67 

May  purchase  or  discount  commercial  paper,  when 67 

May  receive  United  States  bonds  on  deposit  as  bailee 70 

May  rediscount  with  federal  reserve  bank,  what 62 

Municipal    deposits    in 62 

Must  be   conducted,    how   69 

Must  be  duly   organized  2 

Must  not  make  new  loans,  when  64 

Mutual,   reserve  fund  of,   must  be  increased  when 64 

Mutual,   reserve   fund,  when   required 60 

Only,   to   receive  savings  deposits 49 

Organized  without   capital  stock   60 

Purposes    of 4 

Real  property  may  be  purchased  or  held 61 

Reserve  may  be  deposited  on  call  with  federal  reserve  bank 68 

Reserve   required   "° 

Securities  hypothecated,   approval   of   o2 

Shall  not  contract  debt,  except  "2 

Use  of  term   restricted   '2,  I2a,  49 

Without  capital  stock  reserve  fund  must  equal  what '9 

Savings  Department  investments   to  be   separate -^o 

Savings  Deposits,   advertising  for,   prohibited  when '  ^>  '  ^^ 

School  District,  assessment  by,  effect  on  first  lien 5  7 

Bonds  of,  available  for  deposit  by  trust  company 96 

Legality  of  bonds  of  " 

School  Savings,   how   deposited   

Regulations    concerning   " 

Seal  of  superintendent  of  banks  '  ^^ 

Second  Mortgage,  when  bank  may  loan  on '*'•  "' 

Secretary  of  State,  see  Sec.   290a  of  Civil  Code. 

Must  issue   certificate   regarding   consolidation.. ^'^ 

Q 

Shall   certify  documents  when   " 

[225] 


BLYTH.  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

Section 

Securities,  additional  deposit  of,  by  trust  company 98 

Advertisement    of,    limited,    when .-  61 

Certified,   official  list  to  be  kept .--  61a 

Cost    of    investigation    of 61a 

Deposited  by  trust   company,   examination   of 96,  97,  98,  99 

Elxchange  of,  by  trust  companies 96 

Held  by  banks,   must  conform   to   act 145 

Hypothecated   by    savings    bank 62 

Power  of  superintendent   of  banks  to  investigate 61a 

United    States,    as    collateral 65,  80,  83 

Withdrawal   of,  by  trust  companies 98 

Security  percentage,  for  savings  bank  loans 67 

Service   of   papers   on   foreign    corporations 7 

Signs  of  banks  must  show  what      28 

Of  branch  offices  must  show  what 28 

Special  Deputy  Superintendent  of  banks 136 

Special  Report  of  banks,  superintendent  of  banks  may  require 130a 

State,  assessment  by,  effect  on  first  lien 57 

Law   of,    violated   by   banks 134,   135a,  136 

Legality  of  bonds  of 61 

Shall  be  responsible  for  securities  deposited  by  trust  company 96 

State  Banking  Department,  assistants 121 

Attorney     1  2  1 

Banks   must   report   to 130 

Bulletin  to  be  filed  as  public  document 141 

Chief  deputy,   failure  to   report  insolvent  condition 126 

Chief  Deputy,    qualifications   of  121 

Created     120 

Examiner,    failure   to    report    insolvent    condition 126 

Examiner  of,   must   file   oath 125 

Examiner  of,  shall  not  act  as  receiver  when 125 

Examiners 121 

Fund    of    - 123 

Information  to  be  posted  in  office 141 

Officials   of,    cannot  borrow  from   state  banks 121 

Provision    for    offices    122 

Records  of  not  public  documents 142 

Special    report   to    130a 

State  Banking'Fund,   amount   of.. 123 

Banks  shall  be  assessed  for 123 

Method   of   assessing  banks   123 

Salaries  paid  out  of  123 

State   Deposits   in   savings  banks 62 


[2261 


INDEX • 

BANK  ACT  OF  CALIFORNIA— Continued 

STATE  DEPOSITS— Continued  Section 

Reserve  against,   not  required   20,  68 

When  secured,  bank  not  required  to  maintain  capital  against 19 

Statement  of  all  banks,   to  be  submitted  to  governor 140 

State  of  Caiiiornia,  bonds  of,  available  for  deposit  by  trust  companies 96 

State  Treasurer,  deposit  v^rith,   by  trust  company 90 

Deposit  with,  by  trust  department  of  national  bank 48a 

May  accept  mortgage  on  trust  company  premises,  when 97 

To  receive  deposits  of  trust  company  securities 96 

Stationery,   of  banks,  must  show  what 28 

Statute  of  Limitations  on  sale  of  bank  or  department 3  1 

Stock,    as    collateral,    limited 44,  67 

Impairment   of    133,  I  36 

Investment  in,  prohibited  37 

Number  of  shares  held  by  directors  to  be  posted 1  7 

Par  value,   minimum,   except   53 

Preferred,    prohibited,    except    53 

Subscription   lists  of  bank   subject   to   previous   consent   of  superintendent 

of  banks  1  27 

Stockholders  controlling,  may  sell  note,  bond  or  contract  to  bank,  when 35 

Fitness  of,  investigation  of  128 

Information    for    '  ' 

Liability  of,   can  not  be  waived 40 

Liability  of,  in  sale  31 

May  elect  receiver,  when  '36 

May  make  application  to  dissolve  '37 

Meeting  of,   may  be  called  by  superintendent  of  banks 135 

Must  be  notified  of  assessment 133 

Must   confirm   consolidation    3  1a 

Names  of,  to  be  on  file '  ' 

Refusal  to  pay  assessment  '33 

Stockholders'    Meeting,    superintendent   of  banks   may   call '35 

Street  Railroad   Corporation,   definition   of 6! 

Subscription  Lists,  for  organization  stock  of  bank,  must  be  approved 127 

Summons,  service  on  foreign  corporation  ' 

Superintendent  of  Banks,  action  by,  to  procure  judgment  of  dissolution 135a 

Annual  report  to  governor  ' '*" 

'Appointment   of   '  "" 

Approval   of   capital   and   surplus  apportioned 23 

Approval  to  close  branch  office  " 

Approval  to  open  branch  office 

Approval  to  transact  banking  business  '^^ 

Authority  to  liquidate  bank  

D      J              •     J  120 

Bond    required    

[227] 


BLYTH,  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

SUPEEINTENDENT  OF  BANKS— Continued  Section 

Bulletin  to  be  posted  in  office  of 141 

Certificate    of    9,   127,   128 

Certificate  of,  to  be  posted  50 

Consent  necessary  to  do  departmental  business 23 

Consent  of,   necessary   to  organize  banking  corporation 127 

Copy  of  corporate  papers  to  be  filed  with 8 

Designation   of   depositary 20,  43 

Duties  relating  to  conversion,  state  bank  into  national  bank 56a 

Foreign  corporations  subject  to  supervision 7 

Holds  office  at  pleasure  of  governor 120 

Issuance  of  order  to  show  cause,  when 134 

Liquidation  by   1  36 

May  appoint  special  deputies 136 

May  authorize  acceptance  of  drafts  and  bills  of  exchange  by  commercial 

banks    80 

May  authorize  additional  deposits  by  trust  company 98 

May  authorize  deposits  by  trust  company 36 

May  authorize  exchange  of  trust  company  securities 96 

May  authorize  withdrawal  of  trust  company  deposits,  when 98 

May  call  meeting  of  stockholders  135 

May  compromise  pecuniary  penalties  or  forfeiture  imposed 144 

May  enforce   stockholders'    liability   136 

May  examine  national  banks,  when 48 

May  examine  trust  department  of  national  bank 48a 

May  limit  deposit  by  commercial  banks  with  other  commercial  banks 85 

May  make  extra  examinations  124 

May  require  special  report  130a 

May  renew  certification  of  bonds  without  application,  when 61a 

May  retain  revolving  fund  123 

May  revoke  designation  of  depositary  43 

May  take  possession  of  unsound  bank  136 

Must  make  special  examination  by  order  of  directors 139 

Oath  of  office  120 

Official   reports  prima  facie  evidence 142 

Official  seal  of  134 

Powers  of  1  24 

Power  to   examine  foreign   corporations    124 

Power  to  investigate  bonds  and   securities 61a 

Previous  consent  to  circulate  stock  lists  for  bank 127 

Reports  of  banks  to  130 

Report  to,  by  banks,  how  often  131 

Report  to,  by  bank,  to  be  published  132 

Salary      120 


12281 


INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

SUPERINTENDENT  OF  BANKS— Continued  Section 

Shall  be  appointed  attorney  of  foreign  corporations,  when 7 

Shall  direct  discontinuance  of  unsound  practices 134 

Shall  employ  chief  deputy,  attorney,  examiners  and  other  assistants 121 

Shall  give  notice  of  liquidation  proceedings  136 

Shall  not  be  connected  with  banks   120 

Shall  not  inspect  private  trusts,  except 101 

Shall  provide  auditor,  when  124 

Shall  require  banks  to  repair  capital,  when 133 

To   regulate  foreign  banking  58 

Trust  company  must  report,  what  98 

Superior  Court,  as  to  conflicting  claims,  liquidation  of  banks 136 

Winding  up  affairs  of  bank 136 

Surplus,  advertising  of,  shall  be  separate 14 

Apportioned   to   departments  23,  60,  90 

Maximum  necessary  to  maintain  2  1 

May  be  converted  into  capital  2  I 

Of  savings  bank,  in  what  invested 61 

Of  trust  company,  in  what  invested 105 

One-tenth  of  net  profits  to  be  added  before  dividend 2  1 

Reapportionment   to    departments         23 

When  may  be  used  to  pay  losses 2  1 

Taxes,  effect  on  first  lien  on  real  estate 57 

Telegraph  Company,  has  power  to  receive  money  for  transmission 13 

Telegraph  Corporation,  definition  of  6  I 

Telephone  Company,  has  power  to  receive  money  for  transmission 13 

Telephone   Corporation,   definition   of   61 

Timber  Land,  fixing  market  value  61 

Redwood,  loans  on,  by  savings  banks 61 

Title  of  act  ' 

To  accompany  mortgage  deposited  by  trust  company 99 

Torrens,  when  may  be  accepted  99 

Title   Insurance  Company,   doing  trust  business.. 106,  107 

Shall  not  conduct  commercial  or  savings  bank  22,  37 

Trust  department,  application  of  law  '0/ 

Trust  department,  assessment  for  state  banking  department 107 

Trust  department,  must  report  to  superintendent  of  banks 107 

Trust  department,  subject  to  supervision  '^' 

Torrens  Title,   when  may  be  accepted "' 

Total  Reserves,    definition  of   

Trust  funds  not  to  be  carried  as  any  part  of 32 

Town,  assessment  by,  effect  on  first  lien 

Trade  acceptances,  when  eligible  for  savings  banks "' 

[2291 


BLYTH,  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

Section 
Transatlantic  Steamship  Company,  has  power  to   receive  money  for  transmis- 
sion      1 3 

Transfer  of  assets  and  liabilities  by  bank 31 

Transpacific  Steamship  Company,  has  power  to  receive  money  for  transmission  I  3 

Trust  Company,  additional  deposits  by,  to  be  authorized 98 

Additional  deposit  with  state  treasurer,  when 9S 

Additional  powers  dependent  upon  location  90 

Additional  powers  of  certain  companies  106,   107 

Additional    report    required 101 

Advertising,   how  regulated  ■- 28 

Affidavit  to  be  made  before  commencing  business 90 

Appointment  as  trustee,  bond  not  required  except 94 

Articles    of    incorporation    90 

Banks  may  acquire  stock  in,  when 3  7 

Becoming  member  of  federal  reserve  bank 90 

Capital  required  90 

Causes  for   dissolution   134,   136 

Certain  documents  to  accompany  mortgage  deposited  with  state 99 

Court   trusts    : 96,   I  0  1 

Definition    of    6 

Departmental  business  I  06 

Deposits  by,   to  be  authorized 96 

Deposits  with,  authorized  by  court  9  I 

Deposits  with,  by  court  order  93 

Deposits  with,  how  secured  98 

Deposits   with   state   treasurer 96,  97,  98,  99 

Exchange  of  securities  deposited  by,   to  be  authorized 96 

Foreign,  may  act  as  trustee  in  this  state  for  what  purposes 7,  90 

Foreign,  may  buy  and  sell  bonds  in  this  state.. 12c 

Foreign,  may  have  representative  in  this  state,  when I  2c 

How  organized  to  conduct  3 

Interest  or  dividends  on  securities  deposited 96 

Investment  of  trust  funds  94 

Knowledge   of  private   trusts  confidential 103 

Liquidation    of    '  36 

May  act  as  executor 6,  90 

May  mortgage  premises  to  state  treasurer,  when 97 

May  resign  as  trustee  under  private  trust,  when 1  0  1 

May  withdraw  securities  from   state  treasurer,   when 98 

Must  be  duly  organized  2 

Must  not  be  foreign  corporation,  except 7,  90 

Notification  of  increase  in  trusts  to  be  made 98 

Oath  as  executor  required  90 


|2301 


_^_=.  INDEX 

BANK  ACT  OF  CALIFORNIA— Continued 

TRUST  COMPANY— Continued  Section 

Powers  of  z 

Private  trusts   95  |oi 

Private  trusts,  confidential,  except  I  01,  103 

Private  trust  sKall  be  deemed  to  be  court  trust,  when 101 

Provisions  for  ceasing  business  102 

Purpose  of   5 

Qualifications   90 

Reserve    of    |05 

Restriction    on   investments    105,  106 

Revocation  of  certificate  shall  not  affect  trusts 98 

Securities  deposited  may  be  exchanged 96 

Securities   deposited  with  treasurer  to  be  accompanied  by  what 99 

Shall  pay  interest  on  deposits 95 

Trust  funds,  meaning  of  term  98 

Trusts   classified   I  0  1 

Use  of  term  restricted  12,  12a,  12b 

When  national  banks  may  act  as  48a 

Trust  Department,  affairs  shall  be  separate 90 

May  deposit  with  commercial  department  of  same  corporation,  when 25 

May  deposit  with  savings  department  of  same  corporation 25 

Of  national  bank  subject  to  trust  company  regulations 48a 

Of  national  bank  subject  to  inspection 48a 

Operated  by  Title  Insurance  Company 106,  107 

Trustee,  deposits  by  51 

Foreign  corporations  permitted  to  act  as,  when 7,  90 

When  acting  as  escrow  holder  101 

Trust  Funds,  deposits  of 25 

Interest  on,  as  provided  by  court  95 

Investments,   how  regulated  105 

Meaning  of   term   98 

Shall  not  be   counted  as  reserve 32 

Shall  not  be  mingled  32 

Trusts,  how  classified  101 

Unclaimed  Deposits,  escheat  of  15 

Publication    of    1  5 

Report   of   1  5 

Undivided  Profits,  one-tenth  to  be  carried  to  surplus  before  dividend 21 

Shall    not   be    combined   with    surplus    in   advertising 14 

United  States,  assessment  by,  effect  on  first  lien 5  7 

Bonds  accepted  by  savings  banks  as  bailee 70 

Bonds  available  for  deposit  by  trust  company 96 

Deposits,   reserve  against  not   required 20,  68 

Deposits  when  secured,  banks  not  required  to  maintain  capital  against  ...  19 

[2311 


BLYTH,  WITTER  &  CO. 


BANK  ACT  OF  CALIFORNIA— Continued 

UNITED  STATES— Continued  Section 

Legality   of   bonds   of 61 

Moneys,  banks  may  borrow 21a,  62 

Securities,  loans  on  by   commercial  banks 65,  80,  83 

Unknown   Depositors   1  5 

Unsafe  Practices,  penalty  for  134,  136 

Vacancy  in  office  of  superintendent  of  banks,  how  filled 121 

Violation  of  act,  penalty  for,   may  be  compromised 144 

Of  any  law  of  state   134,  135a,  136 

Of  bank  act  by  others  than  banking  corporations 1,   145 

Voluntary   Liquidation   of  banks 136a,  137 

Warning  to  discontinue  violation  of  law 134 

Water  Corporation,  definition  of  61 

Withdrawal  of  savings  deposits,  conditions  of 64 

Of  securities   by   trust   company 96,  102 


[232] 


PRESS  OP  John  Kitchen  Jr.  Co.,  san  francisco 


